[Hyundai Motor's Russia Business Crossroads]③ China-Russia Decline, North America Up 15%... Global Sales Restructuring

China and Russia's Share, Once Over a Quarter,
Recently Decreased to Single Digits
Interest in Regional System Reorganization as Part of Responsible Management

28.7% vs 8.9%.

This represents the change in the proportion of Hyundai Motor's overseas sales in China and Russia. The first figure is from 2016, and the latter is from last year. Until just six years ago, Hyundai Motor, along with its completed vehicle affiliate Kia, sold about 1.8 million units annually in China. The Russian plant also increased its operating rate to around 120% in recent years, making it a key pillar of global sales. Among the plants operated by Hyundai Motor and Kia worldwide, including South Korea, it was the busiest.

Hyundai Motor's sales strategy, which focused on emerging markets, changed unintentionally due to external factors. In China, anti-Korean sentiment surged around the introduction of the Terminal High Altitude Area Defense (THAAD) system, causing a sharp decline. Failure to properly read local market trends, such as luxury models and electric vehicles, was also cited as a factor behind the lag.

Hyundai Motor Russia factory in Saint Petersburg, Russia

In Russia, the plant was completely shut down last year due to the prolonged war following the invasion of Ukraine. It became difficult to receive parts and materials from South Korea and neighboring countries. Most global automakers, including Toyota, Ford, and Mercedes-Benz, have already withdrawn from the local market. The local new car sales market shrank rapidly as consumers tightened their wallets after the war.

The volume lost in China and Russia was compensated by increased sales in advanced markets such as North America and Europe. Currently, the North American region accounts for a quarter of Hyundai Motor's total sales. The company is also gradually increasing its market share in major ASEAN markets like Vietnam and Indonesia, where Japanese manufacturers have traditionally dominated.

Due to these changes, there is speculation that Hyundai Motor Group Chairman Chung Euisun, who introduced the regional headquarters system during his tenure as Vice Chairman, may reorganize it. Hyundai Motor divides the global market into nine regions?South Korea, North America, Latin America, Europe, Russia, India, Middle East and Africa, ASEAN, and Oceania?to devise sales strategies. This is to reflect market characteristics in each region and strengthen regional responsibility management. Additionally, around the end of 2021, Hyundai began operating a super-regional system that groups major regions together.

For example, North and Latin America are managed together as the Americas super-region, while Europe and Russia are grouped as the Europe-Russia super-region. The domestic business division is included in the Asia super-region along with the ASEAN and Oceania regions. The Japan business, which re-entered the market last year, is managed by the domestic business division. China is treated as a separate super-region. Hyundai Motor's sales target for this year is 4.32 million units, a 9.6% increase from last year. The target for China is set more than 20% higher than last year, while the target for Russia is lowered by more than 40%.