Hyundai Pays A Heavy Price In China, US For Having A Sedan-Loving Management

Despite Hyundai’s early success story in China, sales there have been steadily dropping for the past few years, as they do in the United States.

That’s mainly because the Korean car maker missed the shift in consumer tastes, particularly the SUV surge, and started commanding higher prices than its brand image could command, at least according to four Chinese dealers and half a dozen former and current US dealers, executives and employees, who spoke to Reuters.

Back in 2009, Hyundai and Kia’s combined sales in China placed the company in third position, following General Motors and Volkswagen. The Korean manufacturer now ranks ninth, with a market share in China dropping to 4 percent last year, from over 10 percent in 2009.

Industry experts and executives say that Hyundai conceded its stronghold in the low-end market to fast-growing Chinese rivals such as Geely and BYD. In addition, other foreign carmakers defended their market share in the more premium segments but also kept pricing competitive for mainstream models, squeezing Hyundai’s position in the market as an affordable foreign brand in the world’s largest auto market.

Hyundai is facing similar woes in the United States, where its market share fell to 4 percent last year, near a decade low for the Korean automaker.

Hyundai SUVs accounted for just 36 percent of its total US sales last year, compared to GM’s 76 percent and the industry average of 63 percent. The carmaker has already announced its plans to launch more SUV models, including the new Santa Cruz pickup truck for 2020, and to give its regional units more autonomy in order to quickly develop vehicles that are better suited to local tastes.

“One of our challenges back then, and I know it would continue to be a challenge, was that the management at (headquarters) was really big on sedans,” said Ed Kim, a Hyundai U.S. product manager between 2004-2008, now the vice president for California-based auto consultancy Auto Pacific.

“(U.S.) product planning staff, marketing staff really wanted more truck products, more SUVs, but in so many cases, it was very difficult to convince management,” Kim said to Reuters.

The task of reviving Hyundai’s success in the world’s top two car markets will fall on Euisun Chung, the company’s third generation leader. Chung was promoted to executive vice chairman, bringing him closer to succeeding his father and current chairman, Mong-koo Chung.

The younger Chung has already faced some setbacks as he was the one to unveil Hyundai’s “modern premium” brand vision back in 2011 to revamp the image of the company. Clearly this didn’t work as planned, but Euisun Chung is now hiring outsiders, investing in start-ups and forming partnerships with autonomous driving companies in a bid to return Hyundai back to its glory days.

Hyundai’s brand image has certainly gone up the past few years but still is “not anywhere near a premium brand”, according to Nick Reilly, a former chief executive of GM Korea. “So I think they have to go back to the mentality to be very price-competitive in order to maintain the volumes,” he added.

more photos...


  • Andrew Ngo

    There are quite a number of things went wrong. (1)Twin-Clutch Transmission problem. (2)Car still feel cheap especially interior even for the new Sante Fe. (3)Pricing went up too much. (4)Hiding Incentive program from the customer.

    • Galaxium

      The new Santa Fe feels incredibly premium inside – I don’t know what you’re talking about.

    • bd0007

      Even European reviewers have lauded the interior of the new SF.

      C/D “dinged” it b/c it wasn’t up to par w/ Audi.

    • Joe E

      I think your #3 is especially true. In 2009, when the swoopy Sonata looked fresh, and you got a well-equiped car with a 10-year warranty for less than an Accord or Camry, they did very well. Slowly, over time, Hyundai pushed prices up so that the value quotient isn’t as obvious any more. As leasing mainstream models becomes more popular, the long warranty doesn’t matter as much. So if it’s the same price an Accord or Camry…might as well get the “real thing.”

      I also know several peeps who “tried out” Hyundai during the recession because of the lower pricing, said it felt like 3/4 of a Honda or Toyota quality-wise, and went back to Honda / Toyota after their leases were up.

  • Craig

    What with Ford getting out of the sedan business – and other’s pulling away – Hyundai might end up looking pretty. The SUV craze will eventually sizzle out – or at least calm down.

    • MarketAndChurch

      I wish that were the case, but you still get more space with a crossover, the exact same driving dynamics as a sedan, and in two years, the same mpg. People have less and less incentive to spend 26,000 on a Honda Accord when they can get a pretty good CR-V for $4000 more.

      • Craig

        I can’t make up my mind as to whether or not I agree. I personally would choose an Accord over a CR-V. And if the 4 door Accord was a hatchback and offered AWD – I wouldn’t even consider the CRV. [Or any other equivalent SUV] Nothing lasts forever. Maybe station wagons will be all the rage 5 years from now.

        • MarketAndChurch

          Me too, especially if the accord was both a hybrid with 250hp or more. There needs to be more incentives to buy a sedan over a crossover.

  • Charles

    Nice excuse H. However you make ugly cars. This company can’t make anything straight using straight lines! Not for me no thanks.

  • MarketAndChurch

    Look at how late Genesis is to the SUV game. These execs are stuck in another time, there’s no reason to have pursued a G90 and a G70 after that before bringing out a small and midsize SUV.

Lamborghini Huracan Evo Does The Quarter Mile… Faster Than You’d Think

The latest iteration of the baby Lambo is powered by a screaming 5.2-liter V10 with 631 HP – and boy does it go…

Never Get Lost In Nature Again With The Ranger Raptor’s Clever Sat-Nav

Compared by Ford themselves to breadcrumbs, the system places a virtual pin on the map every second.

Lamborghini Aventador S Art Car Salutes Monterey Car Week Attendees

This Lambo was treated as a canvas by 19-year old American street artist Skyler Grey .

Rivian R1S Buyers Will Be Able To Choose Between Three Roof Configurations

One of the options available on Rivian’s upcoming SUV will be a two-piece, removable composite roof .

2020 Porsche 911 GT3 Touring Pounds The Tarmac On The Nordschleife

As with the 991.2-based model, the new GT3 Touring Package will be a 911 purist’s wet dream.

Original McQueen-Driven Mustang Bullitt To Be Auctioned In 2020

The current owner of what is probably the most famous Mustang ever inherited the car from his father.

Driven: 2019 Hyundai Kona Elite Is A Crossover You Might Actually Want

Behind its cute looks, the Kona is a crossover with lots of appealing features that won’t break the bank.

Drako GTE Is A 1200 HP Electric Hyper Sedan That Promises Supercar-Like Handling

Loosely based on the old Fisker Karma, it’s got a massive output, impressive tech and costs $1.25 million.

2019 BMW 330i Fights The Clock At The Hockenheim GP Track

For a four-pot-powered sports sedan, the new generation 330i performed remarkably well on the circuit.

Mercedes-AMG GT 63 S: A Sexy Super Saloon For Those Who Want It All

The GT 63 S four-door combines aggressive looks, room for four and extreme performance, so if you can afford it…