Analysis: Hyundai Kia’s lackluster performance in the Chinese auto market

Gasgoo.com (Shanghai) - Korean automaker Hyundai Kia’s sales performances in the US and China could not be further apart from each other. In the US, the Kia K5 and Hyundai Sonata rank as the second and fourth best vehicles in this class, according to a survey carried out by cars.com. 

However, in China, Hyundai and Kia models have failed to see the same sort of outstanding market success they have achieved in the US. According to national sales rankings for the month of July, the K5 ranked in 81st place with only 2,171 units sold. The Sonata was even further back in 98th place, with only 1,495 units sold.

Hyundai Kia’s failure to resonate with Chinese consumers stems a lot from their poor handling of the market. One of Hyundai Kia’s biggest failings has been that they have failed to pioneer the sort of technological advancements that have allowed brands like VW to gain confidence among Chinese consumers, instead focusing only on engaging in pricing wars with their competitors. This lack of solid brand reputation and seemingly weak products has been detrimental to Hyundai Kia’s sales performance in the market.

Hyundai Kia has also adopted the unique policy of simultaneously pushing different generations of the same model vehicle rather than focusing the newest version of a vehicle. The Cerato, Forte and K3 are all versions of the same model, while the Elantra comes in four different varieties: the ‘old’ Elantra, Yuedong, Langdong and Lingdong. Meanwhile, three generations of the Sonata are being sold simultaneously, as are three versions of the Sportage. The result of having so many of the same vehicles available at the same time is that sales become split. Consumers themselves are also often left confused between the different models.  

Marketing for Hyundai Kia has also been a weak point. Unlike companies like Honda, Hyundai Kia have failed to integrate with the local market and connect with the everyday Chinese consumer. As a result, Hyundai Kia has been unable to fully relay the technical strengths of their products, which has not done anything to help them shake off skepticism in their skill as an automaker. 

Kia’s Chinese JV, Dongfeng Yueda Kia, has seen sales of all of its sedan models fall in the first half of the year. Most worrying among them was the over 60% drop in sales of the K4, which was being hedged to be the successor to the K3.

Dongfeng Yueda Kia’s performance in the SUV market has been overshadowed by its competitors. However, high sales growth rates of the KX3 is encouraging and are signs that the vehicle may go on to be mildly successful in the future. 

Similarly, Beijing Hyundai has seen sales of all of its sedan models fall in the first half of the year. Among them, total sales of the Verna was only a lackluster 73,622 units.

While the Hyundai ix25 has been able to achieve stable sales growth, the ix35 has suffered negative sales growth. Still, compared with fellow Korean manufacturer Dongfeng Yueda Kia, Beijing Hyundai has performed a lot better in the SUV segment, producing stead sales growth rates.

To summarize, Hyundai Kia’s lack of large success in the Chinese market stems from a number of factors which will be difficult to overcome without a lot of effort on the automaker’s part.