EV6's Box Office Success... Hyundai Motor Can't Smile Despite Consecutive Hits

20,016 Units Recorded on First Day of Pre-Orders... Concerns Over Production Disruptions Due to Semiconductor Supply Shortage

[Asia Economy Reporters Jehoon Yoo, Gimin Lee] Hyundai Motor Company and Kia are unable to smile despite a series of new car "blockbuster successes." The global shortage of automotive semiconductors has also struck Hyundai and Kia, causing production disruptions and making significant delivery delays inevitable. Hyundai and Kia plan to minimize damage by procuring alternative parts, but with forecasts suggesting the semiconductor shortage will last at least six months and possibly two to three years, they are struggling to find solutions.

Kia announced on the 1st that as a result of online and offline pre-orders for the dedicated electric vehicle EV6 on the 31st of last month, the number of contracts on the first day totaled 21,016 units. This not only easily surpassed the previous first-day pre-order record of 18,941 units held by the 4th generation Sorento, Kia’s sports utility vehicle (SUV) model, but also exceeded this year’s EV6 sales target of 13,000 units by 162%.

New car models released by Hyundai and Kia this year are setting new records every day. The Ioniq 5, Hyundai’s first dedicated electric vehicle unveiled at the end of February, recorded 23,760 pre-orders on the first day, surpassing the previous Kia Carnival record of 23,006 units. The total number of pre-orders is currently known to be about 40,000 units.

Kia’s mid-to-large sedan K8 also recorded 18,015 contracts on the first day of pre-orders, surpassing the 6th generation Grandeur’s 17,294 units. Hyundai’s multi-purpose vehicle (MPV) Staria recorded 11,003 units, beating the records of the compact sedan and SUVs Avante and Tucson.

However, despite this good news, Hyundai cannot simply smile. Due to the unavoidable shortage of automotive semiconductors, significant production disruptions and delivery delays are inevitable. Hyundai was relatively comfortable until February and March despite the global semiconductor crisis in the automotive industry, but shortages have surfaced this month. The so-called "April crisis" has become a reality.

As a result, Ulsan Plant 1, which produces the Ioniq 5, Kona, and Veloster, will shut down from the 7th to the 14th. To make matters worse, the Ioniq 5, Hyundai’s biggest hit, reduced its monthly production plan from 10,000 units to 2,600 units?a cut of about 75%?due to stabilization issues with the drive motor production facilities.

Other Hyundai plants in Ulsan producing models like the Staria (Plant 4) and Plants 2 to 5 have mostly canceled weekend overtime plans this week. Kia is in a similar situation. Some plants, including Hwaseong, which mainly produces the K8, have canceled weekend overtime schedules due to semiconductor supply issues.

Hyundai holds daily video conferences with suppliers facing semiconductor shortages to discuss supply plans, but the situation is worsening. With no other alternatives, there have even been absurd cases of procuring inventory from the black market. A supplier official said, "Semiconductor parts that usually traded at around $3 (about 3,300 KRW) have now surged to about $30 (about 33,000 KRW) on the U.S. black market. Even if it means taking a loss for now, securing parts at that price is a priority to prevent production disruptions."

Hyundai and Kia are first implementing short-term measures by procuring alternative parts. Bongcheol Ko, Executive Director of Hyundai Mobis ADAS System Sector, explained, "The shortage is mainly occurring with semiconductors produced using the 130-nanometer process, and we are currently using semiconductors produced with 55-nanometer or 18-nanometer processes as short-term substitutes."

Hyundai Motor Group is also pushing for in-house production of automotive semiconductors. A representative example is Hyundai Mobis acquiring the semiconductor business division from Hyundai Autron, a group affiliate, at the end of last year.

However, there are limits to using short-term substitutes, and since the in-house production strategy is a mid- to long-term plan, the prevailing view is that production disruptions caused by the semiconductor shortage will be difficult to resolve in the short term.

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