South Korean Media: Chinese Cars Overwhelm 29 Countries, Korean Automakers Face Crisis!

On June 21, South Korea's financial media outlet Today's Finance published an article stating that Hyundai Motor Group's sense of crisis is not unfounded. As Chinese automakers intensify their low-cost, high-volume production campaigns targeting emerging markets, the operating rates at major production hubs of Hyundai and Kia have significantly declined in the first quarter of this year. The group is now closely monitoring how to formulate effective responses to enhance its manufacturing competitiveness in both developed markets—including the United States and Europe—and emerging markets.

According to industry insiders, the utilization rate of Hyundai’s factory in Indonesia reached only 37.7% in the first quarter of this year—down by half compared to the same period last year. Production has also continued to decline: 22,520 units were produced in Q1 2024, down from 18,150 in Q1 2023 and further dropping to just 12,540 in Q1 2024.

Hyundai’s Vietnam plant, another key base serving the ASEAN market, saw its capacity utilization fall to 44.6%, a drop of over 10 percentage points compared to the same period last year. Although production capacity increased from 21,100 to 27,100 units during the same period, actual output rose only slightly—from 11,700 units to 12,085. Sales performance has similarly failed to recover. The Vietnam plant sold 12,597 units in the first quarter, a 9.6% decrease year-on-year; meanwhile, sales at the Indonesian plant dropped from 17,189 units to 14,703 units, a decline of 14.5%.

Beneath the declining operational rates and falling sales in emerging markets lies the growing market penetration of Chinese electric vehicle brands. Chinese companies such as BYD are rapidly capturing emerging markets by launching affordable models tailored to local consumers' purchasing power. Analysts point out that the price-driven sales surge from Chinese brands is directly undermining the sales foundation of Hyundai and Kia in these regions.

The situation in Latin America mirrors this trend. In the first quarter, Kia’s factory in Mexico operated at 77.9% capacity—slightly improved from the same period last year but still far from full operation. In Brazil, the largest automotive market in South America, sales for both Hyundai and Kia declined slightly, dropping from 208,834 units last year to 207,322 this year. This contrasts sharply with plants in the U.S. and South Korea, both of which operated above 100% capacity, running at full throttle.

With Chinese automakers aggressively expanding their global footprint, competition has intensified. Last year, Chinese automakers ranked in the top three in sales across 29 countries. In markets like Israel and Singapore—areas where Hyundai Motor Group previously held a competitive edge—Chinese car brands climbed two positions in market share rankings, securing the number one spot.

A report from HMG Management Research Institute revealed that last year, Chinese automakers’ market share in the five major ASEAN markets—including Thailand and Indonesia—rose to 11.8%, up 4.6 percentage points from the previous year. In contrast, Hyundai and Kia’s combined market share during the same period fell by 0.9 percentage points to 3.9%. In Brazil, Chinese brands’ market share grew by 2 percentage points to reach 11.3%, while Hyundai and Kia’s share declined by 0.7 percentage points to 7.9%. Moreover, last year, Chinese automakers surpassed Hyundai and Kia in market share across the Middle East, Africa, and Australia. Indeed, as Chinese automakers surge forward, Hyundai and Kia are experiencing setbacks.

Professor Kim Pil-soo from the Department of Automotive Engineering at Dalin University analyzed: “Southeast Asian consumers tend to favor cost-effective vehicles, and China has already captured a substantial share of the EV market. Unless they can match both cost-effectiveness and quality, it will be difficult to compete with Chinese brands.”

Original article: toutiao.com/article/1868573815953408/

Disclaimer: The views expressed in this article are those of the author(s) alone.