Hyundai, Kia's China sales dip 22 pct through May

All News 18:00 June 19, 2019

By Choi Kyong-ae

SEOUL, June 19 (Yonhap) -- Hyundai Motor Co. and affiliate Kia Motors Corp. said Wednesday their combined sales in China plunged 22 percent in the January-May period on low demand amid a slump in the world's largest auto market.

Hyundai and Kia sold a total of 343,383 vehicles in China in the first five months of the year, down from 438,364 units a year earlier, according to data from the companies.

The main culprit for the weak sales result was the lingering impact of a diplomatic row between Seoul and Washington over the deployment of an advanced U.S. anti-missile system, called Terminal High Altitude Area Defense, in South Korea in 2017, analysts said.

Weak demand in the neighboring country will remain a major headache for the Korean carmakers for the rest of the year, making it hard for them to achieve their sales target of 7.6 million units this year, they said.

"The Chinese automobile market itself is slowing down, reeling from an escalating trade war with the United States. And an increasing number of local consumers prefer car-sharing services over new car purchases," Oh Dong-ryun, an analyst at Samsung Securities Co., said over the phone.

A 17 percent decline in vehicle demand in China dealt a hard blow to Hyundai and Kia compared to premium carmakers such as BMW and Mercedes-Benz, he said.

Due to weak demand, Kia plans to shut down one of its three plants, which have a combined capacity of 890,000 units, in Yancheng, Jiangsu Province, this month. Kia's local business partner Dongfeng Yueda plans to start producing electric vehicles in the 140,000-unit-a-year plant in 2021.

Hyundai, which owns a 34 percent stake in Kia, is also considering halting production of its No. 1 Beijing plant with a capacity of 300,000 units, as its utilization rate recently fell below 50 percent.

Hyundai has three plants in Beijing, as well as one in Changzhou and another in Chongqing. Their combined capacity is some 1.65 million vehicles.

Hyundai and Kia's combined sales in China plunged 36 percent to 1,145,012 autos in 2017 from a year earlier. The carmakers' woes there continued last year with growth in sales nearly stalled at 1,160,179.

In contrast, they have posted improved sales in the U.S. and Europe, helped by competitive sport utility vehicles and localized models.

In the U.S., their sales rose 3.4 percent to 525,289 autos in the January-May period of this year from 507,988 a year earlier, and they gained 0.2 percent to 457,153 from 456,023 in Europe during the same timeframe, the data showed.

"Robust sales of SUV models such as Hyundai's Palisade and Santa Fe and Kia's Telluride will prop up their bottom line this year to a certain extent. But without sales recovery in China, they are on track to miss their sales target this year," Kim Jin-woo, an analyst at Korea Investment and Securities Co. said.

Globally, Hyundai and Kia saw their combined sales slip 3.3 percent to 2,864,743 from January to May from 2,963,230 a year earlier.