S.Korean key automakers see car sales in China cut in half

[ahojunk]

S.Korean key automakers see car sales in China cut in half
(Xinhua) 15:22, April 04, 2017

SEOUL, April 4 (Xinhua) -- Hyundai Motor and Kia Motors, South Korea's top two automakers, saw car sales in the Chinese market cut in half last month, statistics showed.

Auto sales in China by Hyundai and its affiliate Kia numbered 56,026 units and 16,006 units each in March, down 44.3 percent and 68 percent compared with a year earlier, according to industry data cited by Newsis local news agency.

Combined sales in China of the two carmakers reached 72,032 vehicles in March, down 52.2 percent from a year ago. It marked the first time since February last year that the combined figure fell below the 100,000 level.

Auto production in South Korea grew in February on export recovery, with the number of cars produced in domestic factories reached 336,032 units, up 9.8 percent from a year earlier.

Car exports advanced 5.3 percent in February from a year earlier to 201,757 units.


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It is starting to bite!
.

 

[GS Zhou]

S.Korean key automakers see car sales in China cut in half

the fundamental reason for Hyundai/Kia's sales decline in China is because of Korean cars' weakening product performance advantage against Chinese branded cars. We've seen similar trends happening in white goods, smartphones,etc., now it happens in car space too. But of course, the disputes on Thaad makes the process accelerated.

 

[cirr]

South Korean Automakers Cut China Production Amid Missile Dispute

Published April 04, 2017 Auto Reuters

The logo of Hyundai Motor is seen at its dealership in Seoul, South Korea, December 15, 2016. Picture taken December 15, 2016. REUTERS/Kim Hong-Ji (Copyright Reuters 2017)

SEOUL – South Korea's Hyundai Motor Co and Kia Motors Corp have sharply cut vehicle production in China, sources said, as anti-Korean sentiment and competition from Chinese brands play havoc on sales and threaten earnings.

Hyundai and Kia saw their combined China sales slump by 52 percent in March from a year earlier, Yonhap news agency reported on Tuesday, endangering not only the automakers' earnings but those of its South Korean suppliers. China, the world's biggest auto market, accounted for over a quarter of the pair's 2016 overseas sales.

Political tensions have soared since late February when South Korea's Lotte Group agreed to provide land for a U.S. missile defense system outside Seoul. The move angered Beijing, although Seoul says the system is a response to North Korea's nuclear threat and is not aimed at China.

South Korean firms including Lotte Group have been targeted in a Chinese backlash involving boycott calls in state media, protests and suspensions of operations.

Analysts and sources said that while the diplomatic row was a nuisance, the bigger problem for the South Korean carmakers was their inability to compete in China and the United States, where their mainstay sedans have lost market share to sport utility vehicles.

SHIFT CUTS

Kia Motors has cut production shifts at its China factories, two of the sources familiar with the matter told Reuters. Hyundai also had eliminated a second shift from its three factories in Beijing starting mid-March, one of the people said.

The sources declined to be identified because the matter was not public. The automakers declined to comment on Tuesday.

Hyundai had already suspended output at its factory in Hebei from March 24 to April 4.

Operating one shift instead of two shifts is a "drastic, rare move" for Hyundai Motor and could cut daily output by more than half, said Lee Myung-hoon, an analyst at HMC Investment & Securities.

The anti-Korean sentiment was unlikely to end soon, he added, citing the example of the year-long backlash against Japan in 2012 over a territorial dispute which forced Japanese automakers to slash production.

"But I don't think the problems will be prolonged because it will have more harm on Chinese partners and local employment," he said.

Poor consumer sentiment towards South Korean products in China had likely dragged down overseas sales in March, the companies said on Monday without putting a number on the falls. One source said Kia Motors' China sales likely more than halved in March from the year prior.

In the United States, Hyundai Motor posted a sales fall of 8 percent and Kia Motors slumped 15 percent in March from a year earlier. The U.S. market declined 2 percent in March.

Hyundai Motor shares extended losses, down 3.5 percent and Kia Motors declined 1.4 percent in the wider market, which was down 0.2 percent as of 0532 GMT.

http://www.foxbusiness.com/features...ut-china-production-amid-missile-dispute.html

 

[TaiShang]

In the United States, Hyundai Motor posted a sales fall of 8 percent and Kia Motors slumped 15 percent in March from a year earlier. The U.S. market declined 2 percent in March.

If Korea is further pushed out of the US market, then, SK government's ill-adviced decision to place US missiles near China would bite them even harder.

Nonetheless, I am still in favor of thinking that the slump in sales in China is due to growing competition by China automakers.

 

[GS Zhou]

Nonetheless, I am still in favor of thinking that the slump in sales in China is due to growing competition by China automakers.

Take a look at the growth rate of the Chinese branded cars, then you will not be surprised to see the sales collapse of the Korean brands!

-GAC's own brand business: grows by 67.28% at Q1-2017
-SAIC's own brand business: grows by 112.27% at Q1-2017
-Geely: grows by 105% by Feb. 2017 (YTD)

 

[TaiShang]

-GAC's own brand business: grows by 67.28% at Q1-2017
-SAIC's own brand business: grows by 112.27% at Q1-2017
-Geely: grows by 105% by Feb. 2017 (YTD)

Very positive growth numbers. No wonder Koreans feel it; and feel it first, probably, also because of the geopolitical situation.

Do you have growth numbers for Changan? I have great interest in their CS SUV line; especially the recently released CS95.

 

[AndrewJin]

Take a look at the growth rate of the Chinese branded cars, then you will not be surprised to see the sales collapse of the Korean brands!

-GAC's own brand business: grows by 67.28% at Q1-2017
-SAIC's own brand business: grows by 112.27% at Q1-2017
-Geely: grows by 105% by Feb. 2017 (YTD)

View attachment 389139 View attachment 389140
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Trust in our own brands!
From smart phones, drones to cars and bullet trains!

 

[GS Zhou]

Do you have growth numbers for Changan? I have great interest in their CS SUV line; especially the recently released CS95.

Changan's own brand grows about 10% in Q1-2017, consistent with the overall market growth. Not bad.

For CS95, it is a newly-launched model, so we don't have its sales figure yet. But considering its high pricing (relatively), I won't be too optimistic on its sales performance. I hope it could achieve a monthly sales volume in between 2k~3k units.

Trust in our own brands!

Of course. I won't see the success of a foreign brand in China as the success of China. China's success could only be guaranteed by our own brands.

 

[terranMarine]

Good news indeed, seeing Chinese car brands improving in quality and performance shows China can achieve great results too and sales increase is evident enough. This is gonna hurt SK car brands combining with the political touch, patriotic Chinese will dump SK's brands which will even hurt SK's pocket even harder.

 

[TaiShang]

Good news indeed, seeing Chinese car brands improving in quality and performance shows China can achieve great results too and sales increase is evident enough. This is gonna hurt SK car brands combining with the political touch, patriotic Chinese will dump SK's brands which will even hurt SK's pocket even harder.

They already feel the heat. They can have fun with more protectionist US market, which has long matured.

Or find new markets.

 

[terranMarine]

They already feel the heat. They can have fun with more protectionist US market, which has long matured.

Or find new markets.

Now where would SK find a replacement market the size of China? India? Vietnam?
Those who think China is behind SK in high tech industry don't have a clue how fast China is catching up. SK can only depend on NAND and Displays, if those areas are also conquered by China there's nothing left for SK.

 

[GS Zhou]

Now where would SK find a replacement market the size of China? India? Vietnam?

a replacement market the size of China? Haha, such a market NOT exist on this small planet!

About 23 million new cars sold in China last year, i.e. 40% larger than sum of the car sales across the entire European continent (about 16 million units).

 

[TaiShang]

a replacement market the size of China? Haha, such a market NOT exist on this small planet!

About 23 million new cars sold in China last year, i.e. 40% larger than sum of the car sales across the entire European continent (about 16 million units).

SK and Japan are in a silent competition over China's market; when China-SK signed the FTA, Japan suddenly became very interested about moving forward with the trilateral FTA, towards which, till then, it was cool.

It is very unwise for Korea to lose out on China's market at this moment when Mainland market is healthy and growing while Western markets are drying up.

They would be forced into cut-throat competition by China's automakers in any case, but, a not so favorable geopolitical environment makes it even tougher for them.