Hyundai Motor Group's early decision to reduce its dependence on China and increase its presence in the US and Europe has proven to be a masterstroke in the current market environment. As Chinese brands now account for nearly 70% of the Chinese automotive market, foreign automakers are struggling, while Hyundai Motor Group quickly shifted its focus to advanced markets after experiencing a sharp decline in sales in China following the 2017 THAAD (Terminal High Altitude Area Defense) incident.

According to Hyundai Motor and Kia's performance data released on the 4th, only 4% (134,000 units) of their 3.49 million global retail sales in the first half of this year came from China. During the same period, the proportion of sales in China was 30% for Volkswagen Group and 16% for Toyota Group.

Before the aftermath of the THAAD incident, Hyundai Motor and Kia's sales share in China was as high as 21% (793,000 units in the first half of 2016). Over the past eight years, Hyundai Motor Group has significantly reduced its reliance on the Chinese market from 21% to around 4%.

Hyundai Motor Group also reorganized its assets in line with changing regional sales volumes, believing that its investments in China were excessive compared to sales. The company concluded that it needed to cut off its "aching finger" to maintain overall profitability in its global operations. Hyundai Motor reduced its local plants in China from five to three, with one more plant scheduled for sale.

The gap left by the Chinese market was filled by increasing sales in advanced markets such as the US and Europe, as well as emerging markets like India and Latin America. Notably, the share of sales in North America increased from 18% to 26% during the same period, Europe from 13% to 17%, and India nearly doubled from 6% to 12%. As sales in the US and Europe grew, export unit prices rose. Profitability also improved as overseas sales focused on high-margin eco-friendly vehicles and SUVs.

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In contrast, most global manufacturers with high dependence on China are taking a direct hit from the rapid rise of local Chinese electric vehicle brands. As of July this year, the share of imported cars in the Chinese automotive market dropped to 33%. The market share of imports in China had peaked at 56% in 2022, but plummeted within two years due to the strong performance of local brands. Volkswagen Group, which had long maintained the top market share in China, lost its leading position to BYD for the first time last year.

Volkswagen Group's equity earnings from its Chinese joint ventures in the first half of this year fell by about 30% year-on-year to 810 million euros. GM, which once sold 4 million cars annually in China, posted a net loss of $140 million (about 140 billion won) in its Chinese operations in the second quarter of this year. Both companies have recently hinted at strong restructuring measures.

The industry sees poor performance in China as one of the main reasons for restructuring. In July, GM Chair Mary Barra told investors, "There are very few competitors making money in China right now."