Summary: State of Korean SUV makers in China

Gasgoo.com (Shanghai) - One trend evident in recent years is the decline of Korean manufacturers in the SUV market. Only one Korean SUV model, Beijing Hyundai’s New Tucson, managed to sell over 10,000 units in April, as shown by China Passenger Car Association statistics compiled by Gasgoo.com (Chinese). Other Korean SUVs, including the ix25, KX5, Sportage-R, ix35 and KX3, were far outside of the top 20 best-selling SUV models of the month.

Domestic own brand manufacturers continued to dominate the SUV market, with own brands accounting for 57.5% of all SUVs sold in the country from January to April. By comparison, Korean SUVs have been clearly marginalized, comprising 7.3% of all SUVs sold in China over the four month time period.

There are several reasons why Korean SUVs have lost a great deal of popularity in China. First, models from own brands have shown tremendous advances in design, technology and manufacturing quality, which have brought them ever closer to more expensive models from Sino-foreign joint venture enterprises. As a result, more and more consumers have been gravitating to comparable local models which are priced much more reasonably than their foreign brand counterparts.

Secondly, when compared to other foreign brand SUVs, models from Korean manufacturers are not nearly as competitive. Compared to when Korean SUV models were first brought over to China, the SUV market in China has become fiercely competitive, with foreign brands unveiling newer, more well-equipped models and undertaking ever more aggressive marketing strategies. Korean SUVs’ traditional brand strength of possessing superior quality has been continuously eroded over the past years.

In response to falling sales, Korean manufacturers have announced large price cuts, with prices for the Sportage-R and ix35 being reduced to the 11,000 RMB mark in order to compete with own brand models.

For their part, Korean manufacturers have tried to stimulate consumer interest by introducing new model updates, including revisions to the highly outdated Tucson and Sportage-R, with the New Tucson having been announced last September, while the next generation Sportage-R, dubbed KX5, was launched this year. More investments on the part of Korean manufacturers will be needed if they want to reclaim a dominant position in the Chinese SUV market.