Hyundai Motor and Kia, China Sales Down 10.8% in First Half... Organizational Restructuring to Overcome Crisis

[Asia Economy Reporter Ki-min Lee] Hyundai Motor and Kia, which are achieving high sales in major global markets such as the United States, Europe, and India, are still struggling in the Chinese market.

According to the China Passenger Car Association (CPCA) data on the 18th, Hyundai Motor and Kia sold 249,233 units in China in the first half of this year, down 10.8% compared to the same period last year. Compared to the first half of 2019, before the COVID-19 pandemic, when sales in China were 416,684 units, this represents a 40.2% decrease.

Hyundai Motor sold 187,639 units in China in the first half of this year, a 3.5% increase from 181,372 units in the first half of last year, but Kia’s sales decreased by 37.2% compared to 98,031 units in the first half of last year.

In contrast, total automobile sales in China in the first half of this year reached 8,279,469 units, a 22.9% increase compared to last year, and have recovered to about 98% of the level in the first half of 2019.

Hyundai Motor and Kia set their sales targets in China for this year at 562,000 units and 255,000 units respectively, totaling 817,000 units, but at this pace, achieving these targets seems difficult.

Hyundai Motor and Kia sold 808,359 units in the first half of 2016, but sales steadily declined after dropping to around 430,947 units in 2017 due to the deployment of the Terminal High Altitude Area Defense (THAAD) system.

In particular, as the main sales models in the Chinese automobile market are shifting to eco-friendly vehicles and sport utility vehicles (SUVs), sales of sedan models, which were Hyundai Motor and Kia’s main models, have decreased, and local Chinese companies have taken the lead in eco-friendly vehicles.

To overcome this crisis, Hyundai Motor and Kia have drastically reorganized their Chinese operations this month. According to the reorganization plan, Beijing Hyundai and Dongfeng Yueda Kia, local subsidiaries responsible for production and sales in China, have been reorganized under the CEOs of Hyundai Motor and Kia respectively, transitioning to a management system centered on each company’s CEO.

Additionally, the research and development (R&D) and product divisions, which are key to China’s electrification strategy, will also transition to a responsibility system under the headquarters’ R&D and product divisions. The plan is to accelerate the transformation into a provider of eco-friendly mobility solutions by expanding the electrified product lineup in China.

At the Shanghai International Motor Show in April, Hyundai Motor and Kia unveiled their first dedicated electric vehicles, the Hyundai Ioniq 5 and Kia EV6, respectively, and also revealed the Genesis brand’s first electric vehicle model, the G80 Electrified, for the first time worldwide. The brand 'Ginisais' (Genesis’s Chinese name) was also launched.