Hyundai Motor and Kia Return to Japanese and Chinese Markets Leading with Electric Vehicles

Hyundai Returns to Japanese Passenger Car Market After 13 Years Withdrawal
Kia Restructures China Joint Venture... Launching Electric Cars Annually

[Asia Economy Reporter Kiho Sung] Hyundai Motor Group has once again thrown down the gauntlet to Japan, known as the "graveyard of imported cars," and the Chinese market, which has been sluggish since the THAAD (Terminal High Altitude Area Defense) incident. Hyundai Motor is re-entering Japan after 13 years with the dedicated electric vehicle Ioniq 5 and hydrogen electric vehicle 'Nexo,' while Kia is making a comeback in China by launching new electric vehicles annually, starting with the EV6.

Given that Hyundai Motor Group ranks first globally in hydrogen electric vehicles and fifth in electric vehicles, it is interpreted that they intend not to repeat past failures in the Japanese and Chinese markets by leveraging competitive vehicles.

Takao Urabe, Head of Design Team at HMJ R&D Center (from left), Shigeaki Kato, Head of HMJ Passenger Car Business Division, and Ken Sato, HMJ Product Planning Manager, are taking a commemorative photo with the Ioniq 5 and Nexo at the Hyundai Motor media briefing held on the 8th at Mitsui Hall, Otemachi, Tokyo, Japan.

Re-challenging Japan, the ‘Graveyard of Imported Cars’

On the 8th, Hyundai Motor held a briefing at Mitsui Hall in Otemachi, Tokyo, declaring its re-entry into the Japanese passenger car market after 13 years since its withdrawal at the end of 2009. Until now, Hyundai Motor had only operated in the commercial vehicle sector, such as buses, in Japan.

Japan holds only "painful memories" for Hyundai Motor. In the early stages of entry, sales exceeded 2,000 units annually, showing promising performance, but gradually declined. Just before withdrawal in 2008, sales were only about 500 units. The cumulative sales over nine years totaled 15,000 units. Compared to the annual sales of Japanese cars (Toyota and Lexus) in Korea, which stand at around 10,000 units, the gap is significant. Japan is a market where domestic car pride is strong, causing imported brands to struggle. Last year, the share of imported cars in the Japanese market was only 5.4%, less than one-third of Korea’s 18.6%.

Hyundai Motor’s renewed challenge in the Japanese market is based on the judgment that the timing has come considering the global automotive market’s electrification trend. Hyundai Motor Group produces dedicated electric vehicles such as Hyundai’s Ioniq 5, Kia’s EV, and Genesis GV60, whereas Japanese brands do not produce dedicated electric vehicles aside from hybrids and hydrogen cars. Hyundai Motor will also attempt to sell all models exclusively online.

The Japanese government’s eco-friendly car promotion policy, which bans the sale of new internal combustion engine vehicles from 2035, is also a favorable factor. This year, the Japanese government provides subsidies of up to 800,000 yen (approximately 8.4 million KRW) per electric vehicle.

Ryu Chang-seung, Head of Kia China Corporation (left), and Wang Xidong, Director of Yancheng Development Zone, are posing for a commemorative photo at the signing ceremony of the "Kia-Yancheng Investment Expansion Agreement" held on the 7th at the Yancheng City Government Office in Jiangsu Province, China.

Joint Venture Restructuring... Rebound in China

Kia is restructuring its joint venture system and changing its company name to make a comeback in China. On the 7th, Kia restructured the shareholding of Dongfeng Yueda Kia through the ‘Kia-Yancheng City Investment Expansion Agreement.’ Dongfeng Yueda Kia was established in 2002 when Kia first entered the Chinese market.

Dongfeng Yueda Kia’s shares are held by Kia, China’s Dongfeng Motor, and Jiangsu Yueda Group at 50%, 25%, and 25%, respectively. However, under this agreement, Jiangsu Yueda Group acquired the 25% stake held by Dongfeng Motor. As a result, the shareholding structure between Kia and Jiangsu Yueda Group has been reorganized to a 50-50 split. The new company name will be announced at the Beijing Motor Show in April.

Kia struggled due to the THAAD incident and the subsequent ban on Korean cultural content in China. While Kia sold 650,000 units in 2016, sales sharply declined to 220,000 units in 2020 and 120,000 units in 2021.

Kia plans to actively re-enter the Chinese market through the shareholding restructuring. Starting with the EV6 to be launched next year, Kia aims to build a lineup of six dedicated electric vehicles by 2027 by releasing new electric vehicle models annually. Additionally, Kia plans to replace its main models for the Chinese market with global strategic models such as the Carnival and Sportage.

To foster an innovative organizational culture and secure competitiveness suitable for the new joint venture, Kia will accelerate localization efforts by actively hiring local talented and specialized personnel. A Kia official stated, "With the support of Jiangsu Yueda Group and the restructured new joint venture led by Kia, we will early transplant global Kia’s capabilities into China, achieve a rebound in the Chinese business this year through efficient decision-making structure reform and solid business execution," adding, "We will seek the optimal governance structure for sustainable growth in the Chinese market going forward."

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