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Customer LoginsHyundai loses market share in South Korea – IHS data
Due to stiff competition from domestic and foreign automakers, and changing trends in consumer preferences, Hyundai Group market share in South Korea went down from 74.6% in 2011 to 66.5% in 2015.
IHS Automotive Perspective
- Significance: The Hyundai Group's domestic sales grew from 1.16 million units in 2011 to 1.22 million units in 2015, but is losing market share, which fell from 74.6% in 2011 to 66.5% in 2015.
- Implications: Increased competition from domestic and imported brands and changing trends in consumer preferences have driven the slip as South Korean consumers are increasingly moving towards luxury imported vehicles and compact SUVs, where Hyundai has a minimal presence.
- Outlook: A moderate 0.9% decline to 1.21 million units is expected in 2016, and its market share is further expected to fall by 1.2 percentage points to 66.5%.
Light vehicle sales in South Korea grew from 1.52 million units in 2011 to 1.80 million units in 2015, mainly thanks to an improvement in the economy, and the government's efforts to support the local vehicle market, such as reduction in special consumption tax (SCT).
Hyundai
Hyundai Motor Group, including both Hyundai and Kia brands, is South Korea's biggest automaker. The Group's sales rose 2.8% year on year (y/y) in 2011 to 1.16 million vehicles. In 2012 the group sales fell 1.9% y/y to 1.14 million units due to a tepid market, rising fuel prices and inflation, and production disruptions. During 2013, Group sales further declined 4.9% y/y to 1.08 million units, largely due to the sluggish local economy. However, in 2014 the Group returned to positive sales territory, with sales up 3.8% y/y to 1.12 million vehicles, due to extensive new model launches. During the year, Hyundai launched its latest-generation Sonata, Genesis, Avante, Grandeur (including a diesel version), Santa Fe, and Accent. As well as these, Hyundai also began sales of the all-new Aslan luxury sedan in the country. Kia also launched various new models including the latest-generation Carnival (including a diesel version) and Sorento models, while it also refreshed its Pride, K7, K3, and K9. During 2015, Hyundai Group's sales further grew by 8.9% y/y to 1.22 million units. However, during 2011 to 2015 Hyundai's market share went down from 74.6% to 66.5%, largely due to stiff competition from the domestic and foreign automakers, and changing trends in South Korea's consumer preferences.
General Motors, SsangYong, and Renault
General Motors (GM) Korea, the country's second biggest automaker by sales, increased sales from 142,746 units in 2011 to 159,025 units in 2015. The automaker's market share declined to 9.6% in 2014 and it further declined to 8.8% in 2015, mainly due to lack of new models. During 2016, the automaker is expected to regain its lost market share, largely on the back of new model launches. GM Korea has set a growth target of 20% y/y during the year in the country. This would bring its sales in the market to about 190,000, up from about 158,000 units last year. The automaker plans to launch seven new/refreshed models in the country this year. According to IHS Automotive forecast, it is expected that the automaker will capture 9.4% of the South Korean new vehicle market.
SsangYong has been recording consistent growth in sales. The automaker's market share grew from 2.5% in 2011 to 5.5% in 2015, mainly thanks to strong sales of Korando and more recently the Tivoli nameplate. The automaker launched a longer-body version of Tivoli, known as Tivoli Air in March 2016. The vehicle will further boost SsangYong's market share to 5.7% in 2016, according to IHS Automotive forecasts.
French automaker Renault's South Korean arm, Renault-Samsung, registered the sales decline during 2011, and continued to post decline in 2012 to 59,926 units (down 45.1% y/y). During 2013, Renault's sales in the country remained flat at 60,027 units. However, Renault-Samsung received a major boost from the facelifted SM7, known as the SM7 Nova in the domestic market, while demand for its all-new QM3 in 2014 was also strong. During the year, the automaker's sales went up 33.3% y/y to 80,003 units, capturing a market share of 4.9%. Renault Samsung's sales remained flat at 80,017 units in 2015.
Daimler, BMW, VW, and Audi
The German automakers - BMW, Daimler, Volkswagen (VW), and Audi - witnessed 31.2% y/y increase in sales to 69,763 units during 2011, capturing a market share of 4.5%. They witnessed further growth of 27.1%, 24.3%, 25.2%, and 24% y/y growth during 2012, 2013, 2014, and 2015, respectively. During these years, their market shares also went up to 5.8%, 7.3%, 8.5%, and 9.5%. During 2016, the growth of German automakers is expected to slow down to 2.1% y/y to 174,730, capturing a market share of 9.6%, mainly due to pressure on foreign diesel vehicles in the wake of the ongoing diesel emission issue at VW.
Outlook and implications
Despite the uptick in Hyundai's sales in recent years, large questions remain over its ability to maintain its sales momentum. The Hyundai Group is losing market share in South Korea, largely due to stiff competition from domestic and imported brands and also because of changing trends in consumer preferences. South Korean consumers are increasingly moving towards luxury vehicles and compact sport utility vehicles (SUV), where Hyundai has a minimal presence. The premium car market has significantly increased by special consumption tax cut-off, enhanced and extended maintenance and services centres, higher fuel economy, and affordable money from house rental. In general, South Korean consumers believe that premium brands could offer better fuel economy, despite their higher price. Better fuel efficiency could compensate for the initial pricing burden.
In order to increase its market share in the premium segment, Hyundai launched the Genesis luxury brand for global markets in November 2015. The G90, which effectively replaced Hyundai's Equus, was the first model to make its debut under the Genesis brand, and will be joined by five other models by 2020. Genesis G80, the next generation of the existing Hyundai-brand Genesis luxury sedan is expected to go on sale in July in the domestic market. Hyundai's best-selling vehicle in the premium segment, the Grandeur sedan, will also be absorbed into the Genesis line-up next year, under a new name, the G70.
Going forward, KAIDA has maintained a conservative sales forecast for imported vehicles in 2016 because of lower demand for foreign diesel vehicles in the wake of the emission issues at VW. The association forecasts an 8.5% y/y increase in sales of imported vehicles in South Korea during 2016, down from double-digit percentage gains in recent years.
Furthermore, the surge in models in the compact SUV categories have lured younger customers in South Korea who prefer the smaller, more fuel-efficient models with affordable price tags over more traditional A- and B-segment vehicles. According to our data, the B-SUV category grew from 15,896 units in 2015 to 67,091 units in 2016. The segment's market share went up from 1% in 2014 to 3.7% in 2015. However, Hyundai/Kia offers only the Soul SUV in this segment. Hyundai plans to launch a B-CUV in 2017, which will help the automaker to expand its share in the B-SUV segment from an expected 3.9% in 2016 to 28.7% in 2017.
According to IHS Automotive forecast, Hyundai Group will register sales of 1.21 million units (down 1% y/y) in 2016 in South Korea. The automaker is expected to capture a market share of 66.5% during the year, down 1.2 percentage points.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.