Sluggish Sales in US
Hyundai Motor and Kia Motors are suffering from sluggish sales even in the US market. Sales of both companies fell 18% year on year last month. This is because fleet sales (sales to corporate customers such as rent-a-car and taxi companies) were sluggish, and due to lack of sports utility vehicle (SUV) model, the automakers did not properly respond to market demand.
According to foreign news and industry sources on August 2, Hyundai and Kia sold a total of 11,146 units in the US market last month, down 18.2 percent from the same period of last year.
By company, Hyundai Motor sold 54,063 units, a 27.9 percent decrease from the previous year. Kia Motors sold 56,403 units, down 5.9 percent. Hyundai Motor's sales declined year on year for three consecutive months from May and Kia's sales for the seventh consecutive month from January. In the January-July period, Hyundai Motor sold 404,233 units, down 10.8% year-on-year. Kia Motors sold 352,139 units, down 9.3%. The combined sales volume of both companies fell 10.1% year-on-year to 752,562. Hyundai and Kia recorded market shares of 4.1% and 3.6%, respectively.
As the US market slowed down and competition between brands intensified, Hyundai and Kia faced a drop in profitability as a result of lower sales and the expansion of incentives. Hyundai was reported to have an average discount of US$3,249 per vehicle last month. This was lower than the industry average of US$3,565, but 26% higher than incentives paid by Hyundai Motor in the same period last year. Kia Motors also reported an incentive of US$3,468 last month, up 28 percent from a year earlier.
"We significantly reduced fleet sales in order to secure profitability and to maintain the residual value of used cars," he said. "We will boost our substantiality even if our sales fall. At the same time, we will seek to make a recovery in sales by launching new models such as the Sonata Facelift and a new i30 in the second half of this year.”