Hyundai Motor Refines China Strategy... Betting on Premiumization Approach

Despite Record Performance... Significant Year-on-Year Decline in China Sales
Major Lineup Overhaul Focused on Eco-Friendly Vehicles

[Asia Economy Reporter Kiho Sung] Hyundai Motor Company achieved its highest-ever performance in the second quarter of this year, driven by improvements in the 'mix' (model composition ratio) and favorable exchange rates, but sales trends varied significantly by region. In particular, sales in China, considered the largest emerging market, plummeted. Hyundai plans to make a comeback through a lineup reorganization in the Chinese market. Industry experts also expect that Hyundai, having recorded its best-ever performance in Q2, can achieve even greater results by recovering in China.

According to the industry on the 22nd, Hyundai Motor and Kia's top executives and heads of overseas subsidiaries will hold a 'Global Regional Headquarters Meeting' at Hyundai Motor Group's Talent Development Center in Gyeongju to discuss production and sales strategies for the second half of the year. The meeting is expected to review Q2 performance and discuss strategies for the Chinese market.

In the global market, Hyundai sold 976,350 units in Q2 this year, a 5.3% decrease compared to the same period last year. Meanwhile, sales in the Chinese market were 37,000 units, down 60.9% from 95,000 units in the same period last year. While Hyundai is increasing its market share in advanced countries such as the U.S. and Europe by gaining recognition for its technology and product competitiveness as the global automotive industry enters the electrification era, it continues to struggle in China, one of the world's top three automotive markets.

Yoon Tae-sik, head of Hyundai's IR team, said in a conference call, "In Q2, due to semiconductor supply imbalances, global industry demand and our wholesale and retail sales decreased compared to the previous year," adding, "With gradual production expansion, global wholesale sales excluding China have turned to an upward trend."

Hyundai has struggled in the Chinese market since the fallout from the Terminal High Altitude Area Defense (THAAD) system in 2016. After peaking at 1,142,016 units in 2016, sales dropped to 785,007 units in 2017 and recorded 350,277 units last year. This represents a decline to about one-third over five years. Although one of the five local vehicle production plants, Beijing Plant 1, was sold to a Chinese electric vehicle company last year, the situation has not significantly improved.

However, since China is the world's largest automotive market with rapid growth in electric and eco-friendly vehicles, Hyundai cannot afford to give up. Therefore, it is aiming for a turnaround through a major lineup overhaul centered on eco-friendly vehicles.

Hyundai plans to attempt a turnaround with a premium strategy led by the China-exclusive electric vehicle Lafesta new model and the hydrogen fuel cell vehicle Nexo. To this end, it plans to invest 6 billion yuan (approximately 1.16 trillion KRW) within the year. Since Beijing Automotive Group (BAIC) and Beijing Hyundai each hold 50% of the shares, Hyundai will bear half of the investment. Two China-exclusive electric vehicle models are scheduled to be launched next year, with a sales target of 520,000 units in China by 2025.

An industry insider said, "Hyundai initially targeted the Chinese market as a low-cost brand, but now recognizes the market changes," adding, "With a premium strategy, it can differentiate itself from local brands."

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