Another Lockdown in Europe 'Car Sales Tied Up'... Hyundai Kia Motors' Q4 Export Concerns

Lockdown Reintroduction in Major European Countries
Sales Disruptions Expected Due to Demand Contraction

In April, due to a decline in overseas car sales, the Kia Motors Sohari Plant in Gwangmyeong-si, Gyeonggi-do, went on temporary shutdown. (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] As major European countries enter lockdowns again due to the resurgence of the novel coronavirus infection (COVID-19), a sense of crisis is intensifying in the domestic completed car industry. Although the lockdowns are less severe than those in March this year, if demand recovery is delayed, disruptions to automobile sales in the remaining fourth quarter are inevitable.

According to the industry on the 3rd, Hyundai Kia Motors will suspend local dealer network operations in countries such as the United Kingdom and France in accordance with lockdown policies of various European governments. Among major countries, Germany, which entered lockdown from the previous day (2nd), continues to operate car dealerships, but the UK and France must close their doors for about a month.

For now, Hyundai Kia Motors expects the losses from this re-lockdown to be minimal. Although dealerships must close, the lockdown allows vehicle deliveries for existing contracts and online vehicle purchases. A Hyundai Motor official said, "This is not a full suspension of dealer network operations like earlier this year, and inventory is sufficient, so sales are not expected to drop significantly for the next one to two months. However, if the lockdown prolongs, it could become problematic."

The problem is that this lockdown increases the likelihood that consumer sentiment in Europe, which had been recovering since September, will shrink again. Revenge consumption, which was expected during the COVID-19 calming phase, can now only be anticipated after next year. As demand recovery in Europe, one of the world's three largest automobile markets, becomes uncertain, some analyses suggest that it will be difficult for Hyundai Kia Motors to achieve global sales of 6.5 million units this year.

Lee Hang-gu, a research fellow at the Korea Automotive Research Institute, analyzed, "Once movement is restricted, vehicle purchases become difficult, and exports in the fourth quarter are expected to decline compared to the third quarter. Although production accelerated in September and October to secure inventory and showed signs of recovery, it is impossible to keep accumulating inventory amid low demand, so it will be difficult for this atmosphere to continue for the rest of the year."

This content was produced with the assistance of AI translation services.