Strikes at Hyundai plants in Korea, sharply lower sales in China and squeezed margins in the US - 2017 was a tough year for Hyundai

Strikes at Hyundai plants in Korea, sharply lower sales in China and squeezed margins in the US - 2017 was a tough year for Hyundai

As sluggish sales in China and the US hit export volumes, Korean automakers are also suffering the adverse domestic market impacts of industrial action impacting Hyundai and resultant intensified competitive conditions.

Domestic sales by South Korea's five largest automakers combined fell by 15.8% to 132,315 units in December from a revised total of 157,145 units a year earlier, according to preliminary data released individually by the vehicle manufacturers.

The data do not include sales by South Korea's low-volume commercial vehicle manufacturers such as Tata-Daewoo and Daewoo Bus Corporation, which typically account for up to 2% of the domestic vehicle market.

Also not included in the data are sales of imported vehicles, which exceeded 12% of the total vehicle market last year. These are covered in a separate report when the data is released later in the month.

The domestic market in December was adversely affected by industrial action at Hyundai, which held back deliveries to local dealers. Smaller brands also struggled to compete with new models from Hyundai and Kia, with buyers prepared to wait for the latest models to become available.

All domestic brands reported lower domestic sales last month, including Hyundai which saw local deliveries drop by 16% to 53,361 units while Kia sales were 6.2% lower at 46,502 units. GM Korea's sales plunged by 35%, Renault-Samsung's by 29% and Ssangyong's by 0.5% in December.

The preliminary data suggests full-year domestic sales among the five local automakers fell by just under 2% to 1,550,080 units compared with 1,580,865 units in 2016.

Global sales among the country's "big-five" automakers, including vehicles produced overseas by Hyundai and Kia, fell by 16.7% to 719,702 units in December from 853,966 units a year earlier – reflecting sharply lower domestic and overseas sales. Full-year global sales are estimated to have declined by 7.4% to 8,172,744 units in 2017 compared with 8,829,007 units in 2016.

Overseas sales, including vehicles produced overseas by Hyundai and Kia, fell by 15.7% to 587,387 units last month from 696,821 sales a year earlier. Full-year volumes are estimated to have declined by 8.6% to 6,622,662 units from 7,247,733 units previously, mainly reflecting sharply lower Hyundai and Kia sales in the USA and China.

Hyundai Motor's global sales fell by 16.6% to 406,671 units in December from 487,850 units a year earlier on sharply lower domestic and overseas sales. The company blamed industrial action at home and the political fall-out between South Korea and China for its deteriorating performance.

Full-year global sales were down by 7.2% at 4,503,003 units in 2017 from 4,850,992 units in 2016.

Hyundai's domestic sales plunged by over 26% to 53,361 units in December from 72,161 units a year earlier, with sales affected by industrial action at its domestic plants. Full-year domestic sales were still 4.6% higher at 688,939 units compared with 658,642 units in the previous year.

The company's overseas sales continued to drop sharply last month, by 15% to 353,310 units from 415,689 units a year earlier, despite the roll-out of the new Kona SUV model in overseas markets.

Full-year overseas sales were 9% lower at 3,814,064 units compared with 4,192,350 units in 2016. The company continues to struggle with weak demand in the USA and declining volumes in China.

Kia Motor's global sales fell by 17.2% to 226,842 units in December from 273,994 units a year earlier, reflecting much weaker domestic and overseas sales. Full-year sales were 8.4% lower at 2,729,457 units in 2017 compared with 2,979,273 units in 2016.

Domestic sales declined by 6.2% to 46,502 units last month from 49,600 units a year earlier, while full-year sales were 2.5% lower at 521,570 units from 535,000 units in 2016.

Overseas sales fell by close to 20% to 180,340 in December from 224,394 units a year earlier. Full-year overseas sales were 9.7% lower at 2,207,988 units compared with 2,444,272 units in 2016, reflecting mainly weaker sales in the USA and China.

GM Korea's global sales fell by 16.2% to 45,466 units in December from 54,281 units a year earlier, reflecting sharply lower domestic and overseas sales. Full-year sales of built-up vehicles were also down by over 12% at 524,547 units compared with 597,165 units in 2016.

The data do not include exports of knocked-down kits for assembly overseas, which are significant.

Domestic sales continued to plunge last month, by more than 35% to 11,852 units from 18,313 units a year earlier, with a lack of new products putting the brand under pressure from rising competition from Hyundai and Kia. Full-year domestic sales were almost 27% lower at 132,377 units from 180,275 units previously.

CBU exports fell by 6.5% to 33,614 units in December from with 35,968 a year earlier and were down by 5.9% at 392,146 in 2017 from 416,890 units in 2016.

Renault-Samsung's global sales fell by close to 19% to 26,515 units in December from 32,617 units a year earlier, reflecting weaker domestic sales and exports. Full-year sales were still up by 7.6% at 276,808 units compared with 257,345 units in 2016.

Domestic sales continued to plunge in December, by almost 29% to 9,953 units from 14,078 units a year earlier, with the recent launch of a petrol version of the QM6 flagship SUV and an upgraded SM5 sedan unable to fend off rising competition from Hyundai and Kia.

Full-year domestic sales were down by 9.5% at 100,555 units compared with 111,101units in the previous year.

CBU exports declined by 11% to 16,562 autos last month from 18,539 units a year earlier, but were more than 20% higher at 176,272 units over the full year from 146,875 units in 2016 - on strong demand for the SM6 and the QM6 models.

Ssangyong Motor, majority-owned by India's Mahindra & Mahindra, reported a 15% fall in sales of built-up vehicles to 14,208 units in December from 16,705 units a year earlier, reflecting mainly a sharp drop in exports.

Full-year global sales were 7.7% lower at 143,685 units compared with 155,754 units in 2016.

Domestic sales were just slightly lower at 10,647 units last month from 10,700 units a year earlier and were up by 2% at 110,007 units in the whole of 2017 from 107,832 units in the previous year. The company hopes the launch of the new Korando Turismo minivan this month will help underpin domestic sales this year.

CBU exports plunged by more than 59% to 3,561 in December from 6,005 units a year earlier and by over 29% to 37,008 units over the full year from 52,290 units in 2016. The company hopes the global roll-out of the G4 Rexton will help exports recover in the coming months.

South Korean carmakers: domestic/overseas sales by brand, December 2017

DomesticOverseas*Global
Hyundai53361353310406671
Kia46502180340226842
GM Korea118523361445466
Renault-Samsung99531656226515
Ssangyong10647356114208
Total132315587387719702

Source: www.AsiaMotorBusiness.com, industry sources. * excludes CKD exports.