Hyundai/Kia’s Combined Market Share Remains Weak at 2.8%

The author is an analyst of NH Investment & Securities. He can be reached at soohong.cho@nhqv.com. -- Ed. 

 

− May sales of automobiles in China amounted to 1.63mn units (+1.1% y-y). While the pace of y-y growth slightly weakened owing to a fading in Covid 19-induced low base effect, healthy demand sustained overall. By power source, sales of ICEVs dropped to 1.45mn units (-6.1% y-y), while sales of xEVs (EVs/PHEVs) rose to 180,743 units (+165.2% y-y), accounting for 11.1% of the total market (vs 5.2% in May 2020 and 9.8% in Apr 2021), the highest monthly level.

− Tesla sold 21,936 units (Model 3: 9,208 units; Model Y: 12,728 units) in May, bringing its share of EV sales to 12.1%. Of note, Tesla’s sales plummeted to 11,671 units in April due to a boycott caused by quality issues; however, the firm’s sales recovered to some extent in May, surpassing 20,000 units. That said, uncertainties remain regarding quality issues and policy trends in China. On the other hand, sales at three new Chinese EV players (Nio, xPeng, and Li Auto) amounted to 16,720 units (+60.5% y-y), giving them a 9.3% share of China’s EV market (vs 9.7% in May 2020 and 11.3% in Apr 2021).

− Hyundai/Kia’s May sales (retail) in China stood at 31,212 units (-28.9% y-y; market share of 1.9%) and 15,012 units   (-27.5% y-y; 0.92%), respectively. Their combined market share remained weak at 2.8%. Considering the recent improvement in its global competitiveness (including in the US), Hyundai Motor Group (HMG)’s sluggish sales in China are attributed to the failure of its local brand strategy. Although HMG’s sales in China will likely remain sluggish for the time being, we expect a turnaround to emerge from 2023, a time when the firm is expected to shift its business strategy to new energy vehicles (NEVs). We also positively view HMG’s strengthening global competitiveness, evidenced by ongoing market share expansion in the US market.
 

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