Hyundai & Kia Motors in trouble in US market, US market profit down…Worse than China
Choi Yong Soon | cys@ | 2017-09-12 11:17:30

The performance of Hyundai and Kia Motor`s US subsidiaries is getting worse.

In terms of sales volume, the situation in the Chinese market, which hit the ‘THAAD retaliation,’ is the worst. However, the US market is in a more serious situation in terms of profitability.

Sales of eco-friendly cars such as hybrid vehicles (HEV), which had become an alternative to make up for the sluggish market in the first half of the year,

According to the industry on September 11, Hyundai Motor America (HMA) posted a deficit of KRW 245.3 billion in the US market in the first half of this year.

Hyundai`s operating loss in the first half reached 70% of last year`s total operating loss of KRW 341.8 billion, exceeding the deficit of KRW 162.8 billion in 2015. Profitability alone is worse than the Chinese market. In contrast, Hyundai Motor (BHMC), which owns a 50% stake in Hyundai Motor, posted a loss of KRW 210 billion in the first half, less than its US subsidiaries.

The US market is expected to record a large year on year deficit this year as the market is unlikely to recover in a short period of time.

Meanwhile, Kia`s loss growth is much steeper. Kia Motors, which posted a surplus of KRW 18.5 billion in 2015, recorded an operating loss of KRW 134 million last year. However, this year it lost only KRW 135.7 billion in the first half of this year.

Hyundai and Kia`s profitability deteriorated in the US market mainly due to a decline in profitable fleet sales (mass sales such as rental cars) and an increase in dealers` incentives. Hyundai and Kia Motors have been significantly reducing their fleet sales since May, as fleet sales to large corporations, government offices, and corporations are less profitable than general retail sales. Besides, the industry cited declining sedan sales, a lack of sports utility vehicle (SUV) lines, and a lack of price competitiveness as a result of new Hyundai deal prices in recent years.

Sales of eco-friendly cars also fell. According to Hyundai, Hyundai and Kia`s market share in the US HEV market fell from 17.13% in July to 13.85% in August, down 4 percentage points.

By major car models, Kia`s Nihon Heavy Industries (HEV) sold 2,677 units, down 3.1% MoM, and Hyundai Ionic HEVs sold 1093 units, down 9.6% MoM. In particular, Ionic HEV sales declined by more than 10% in July, and the HEV sales volume is gradually decreasing.

A Hyundai Motor representative said, "Personal sales in the US market are fine, but profitability has declined as we have reduced corporate sales.The Ioniq HEV sales also suffered because of strikes in July, August, and holidays."

By Choi Yong Soon cys@

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