Hyundai Targets Japan, Kia Focuses on China... Restarting Northeast Asia Strategy with Electric Vehicles (Comprehensive)

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

Takao Urabe, Head of Design Team at HMJ R&D Center (from left), Shigeaki Kato, Head of Passenger Car Business at HMJ, and Ken Sato, in charge of Product Planning at HMJ, 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.

[Asia Economy Reporter Kiho Sung] Hyundai Motor Group has once again thrown down the gauntlet to the Japanese market, known as the "graveyard of imported cars," and the Chinese market, which has been sluggish since the THAAD (Terminal High Altitude Area Defense) incident. Given that Hyundai Motor Group ranks first globally in hydrogen electric vehicles and fifth in electric vehicles, this move is interpreted as an intention not to repeat past failures in the Japanese and Chinese markets by leveraging competitive vehicles.

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 had only operated in the commercial vehicle sector, such as buses, in Japan.

Japan holds only "painful memories" for Hyundai. In the early stages of its entry, it seemed to perform well by selling over 2,000 units annually, but it gradually retreated. By 2008, just before withdrawal, sales had dropped to 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 are around 10,000 units, the gap is significant. Japan is a market where domestic car pride is strong, and imported brands struggle. Last year, imported cars accounted for only 5.4% of the Japanese market, less than one-third of Korea’s 18.6%.

Hyundai’s renewed challenge in the Japanese market is based on the judgment that the timing has come considering the recent global trend toward electrification in the automotive market. While Hyundai Motor Group produces dedicated electric vehicles such as Hyundai’s Ioniq 5, Kia EV, and Genesis GV60, Japanese brands do not produce dedicated electric vehicles other than hybrids and hydrogen cars.

Hyundai operates its sales process entirely online, from browsing to payment and delivery, through its website and mobile app as a one-stop online sales system. Starting with Yokohama in the second half of this year, it plans to establish 'Hyundai Customer Experience Centers' in major regions nationwide within a few years to provide offline brand experience, purchase support, maintenance, and education.

Recently, Hyundai changed the name of its Japanese subsidiary from Hyundai Motors Japan to Hyundai Mobility Japan. This reflects Hyundai’s goal to reinvent itself as a 'smart mobility solution provider' in Japan as well.

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 offers subsidies of up to 800,000 yen (approximately 8.4 million KRW) per electric vehicle.

Ryu Chang-seung, Head of Kia's China Branch (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.

Restructuring Joint Venture... Rebound in China

Kia is restructuring its joint venture and changing its company name to make a fresh start 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 the new agreement, Jiangsu Yueda Group acquired the 25% stake previously held by Dongfeng Motor. As a result, the shareholding structure between Kia and Jiangsu Yueda Group has been reorganized into a 50-50 split.

Kia struggled after the THAAD incident in 2017 and the subsequent ban on Korean entertainment content (Hallyu ban). Sales, which were 650,000 units in 2016, shrank significantly to 220,000 units in 2020 and 120,000 units in 2021.

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

At the Beijing Motor Show in April, Kia will announce the new name of the joint venture, along with new CI and SI, and will innovatively improve showrooms and stores applying the new SI to dramatically enhance brand image at customer touchpoints.

Kia intends to make this year the first year of a rebound in its China business by focusing on solid sales and aggressive marketing activities, actively communicating its future business vision to Chinese consumers.

Additionally, to foster an innovative organizational culture and secure competitiveness suitable for the new joint venture, Kia will accelerate localization efforts by actively recruiting local talented and professional personnel. A Kia official stated, "With the support of Jiangsu Yueda Group and the restructuring led by Kia, we will quickly transplant global Kia’s capabilities to China, achieve a rebound in China 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.