Domestic sales by South Korea’s five main automakers combined fell by 6% to 107,017 units in September 2023 from 113,806 a year earlier, according to preliminary wholesale data released individually by the manufacturers. The vehicle market has begun to weaken in recent months as consumers and local businesses come under increasing pressure from higher borrowing costs following last year’s sharp interest rate hikes – from 1.25% to 3.5% currently. The strong market growth seen in the first half of 2023 was mainly driven by an easing of last year’s supply chain bottlenecks, which has allowed automakers to fulfil order backlogs, and also significant new model activity – particularly by the leading domestic automakers. September’s market decline follows a weaker-than-expected August. Given recent market weakness and a slowing economy, GlobalData has made some downward adjustments in the 2023-2026 forecasts. Sales of light vehicles in Korea are now projected to increase by 4.2% (compared to the previous 5%) to 1.72 million units this year. The 2024 forecast of 1.79 million units (+4%) also carries some downside risk.

Japan BEV challenges

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A year ago, we presented two potential scenarios for the future of the battery electric vehicle (BEV) market in Japan. The first one was that BEV sales in Japan would gradually grow in all segments evenly. In Japan, the Premium segment is covered mainly by European OEMs replacing their internal combustion engine (ICE) models with BEVs, and in the medium term, Toyota is planning to introduce Lexus BEV models as replacements for all Lexus ICE/hybrid models. This transition is expected to be completed by 2035. On the other hand, for the non-premium segment, Nissan and Mitsubishi started launching their BEVs before other Japanese OEMs. Now all the Japanese OEMs have announced their BEV strategies. In addition, it is worth noting that both Hyundai and BYD have begun introducing their BEV models in Japan.

Thai electrification

In recent months, Thailand’s automotive landscape has undergone a monumental transformation with the entry of two formidable Chinese EV giants, GAC Aion and Changan. They follow in the footsteps of BYD, the world’s leading electric car manufacturer, which made its foray into the Thai EV market just last year. As these newcomers explore the advantages and prepare to partake in Thailand’s incentives package, the country is already hosting a total of 23 promoted projects involving 16 different OEMs in electric vehicle production, with an investment value of 75,141 million THB, and an EV production capacity of 710,000 units, positioning Thailand as the leading manufacturing hub for EVs in ASEAN. The journey began in 2017, a time when pick-up trucks and eco cars reigned supreme as the country’s product champions. However, with the global shift towards electrification, the government set its sights on embracing the EV wave as a new S-curve product and unveiled ambitious plans that included the introduction of hybrid, plug-in hybrid (PHEV), and battery electric vehicle (BEV) incentive programmes that offered corporate income tax (CIT) reduction and excise tax benefits. The BEV odyssey began in late 2018 when Nissan unveiled the Leaf, followed shortly by the launch of the MG ZS EV in early 2019.

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Toyota Motor has signed an agreement with local energy conglomerate Idemitsu Kosan to co-develop “mass production technologies for solid electrolytes, improve productivity and establish a supply chain for mass production of all solid state batteries” for battery electric vehicles (BEVs). The two companies aim to “lead the world” in the development of materials for solid state batteries, with a view to beginning commercial production in the 2027-28 fiscal year, as had previously been announced at the ‘Toyota Technical Workshop’ last June. Toyota noted Idemitsu has been working on research and development of elemental technology for solid state batteries since 2001 while its own research in this area started in 2006. The collaboration will focus on sulphide solid electrolytes which are seen as one of the most promising materials to achieve the high capacity and high energy output required of BEV batteries.

Brazil exports falling

Anfavea has raised its full year registrations growth forecast versus 2022 to 6% from 3% but the export outlook is not so rosy. Light and heavy vehicle sales in Brazil topped 197,900 units last month despite September having two less working days than August. Nine month sales reached 1.63 m, an 8.3% increase on YTD 2022. A sales slump had been feared after government subsidy discounts in July ended. Since that did not happen, auto manufacturers association Anfavea raised its full year registrations growth forecast versus 2022 to 6% from 3%. Expectations by various analysts point to 2.23 m registrations by year end. The light vehicle sales forecast has been revised up to 7.2% from 4.1% estimated in January.

End of life batteries

Honda and Japanese trading house Mitsubishi Corporation will join forces to explore new business opportunities in the electric vehicle (EV) battery segment, according to local reports. The news came shortly after Toyota announced an alliance with Japanese energy group Idemitsu Kosan to develop solid state batteries for EVs. Honda and Mitsubishi are eyeing opportunities to use batteries as an energy source at the end of their EV lifecycle and also opportunities in smart charging which optimises energy storage by recharging during low grid demand times.

Asia exhaust plants

Two days after starting operations in Malaysia, joint venture partners Purem by Eberspaecher and AAPICO Hitech opened their new exhaust plant in Rayong, Thailand. The production site, 100km southeast of Bangkok, will supply exhaust systems for “a pickup truck of a leading US automotive manufacturer”. The new plant covers 3,000 square metres and was built in only five months on AAPICO´s Rayong campus. About 150 employees will work there. As the market in Thailand for exhaust systems is growing, the plant has a yearly capacity of 300,000 systems.

Hyundai JV to build Arcfox

Hyundai Motor has agreed to produce electric vehicles (EVs) under BAIC Motor Corporation’s Arcfox brand at their joint venture factory in Beijing, according to South Korean reports. The two companies appear set to produce the EVs next year at a plant belonging to Beijing Hyundai Motor Company, the 50:50 joint venture in the country, with finer details of the deal still under discussion. BAIC, which also operates the Beijing Benz JV with Mercedes-Benz, established Arcfox as a premium EV brand in 2017 with a flagship Alpha S·HI model equipped with a Huawei self driving system. Hyundai is struggling to rebuild its operations in China

Skoda returns to a market

Skoda has announced it is posed to re-enter the Kazakhstan market after partnering with Allur Company, a local distributor. Local assembly of the Kodiaq, Kamiq, Karoq and Octavia is expected to begin in early 2024, the company said. The VW Group automaker operated in Kazakhstan between 2005 and 2021, delivering a relatively small number of vehicles to customers, over 23,000.

Another Stellantis US battery plant

Samsung SDI has chosen Kokomo, Indiana as the location for its second US electric vehicle (EV) joint venture battery plant with Stellantis. The JV, StarPlus Energy, is already building a Kokomo factory with capacity for 33GWh of batteries per year from early 2025. Samsung SDI has a 51% stake with Stellantis holding the rest. The second plant is scheduled to be complete in 2027 with capacity of 34 GWh, giving the JV total capacity of 67 GWh per year or enough to power 1m EVs.

Investors eye UK gigafactory

The UK’s West Midlands Gigafactory joint venture has confirmed that it is in advanced discussions with several leading Asian battery manufacturers about future investment at the Coventry site. The JV is a partnership between Coventry City Council and Coventry Airport. Details of the Asian firms have not been released. Speaking at the Labour Party Conference earlier this week, Cllr Jim O’Boyle, Cabinet Member for Jobs, Regeneration and Climate Change at Coventry City Council, said: “I’m pleased to report that we are now in advanced discussions with leading Asian battery manufacturers who want to develop a presence in the UK. We hope, with the support of the UK Government, that we will secure an investor and further strengthen our region’s leadership credentials in the shift towards electrification.”

Hyundai SUV high demand

Hyundai said it planned to increase production of its newly launched Exter small SUV in India to meet strong demand in a segment with few competitors. India last year was the world’s third largest automotive market, behind only China and the US, with 4.8m sales. Hyundai said it planned to increase Exter production from 6,000 to 8,000 units per month by the end of 2023 at a factory near Chennai to meet growing demand for entry level SUVs.

Have a nice weekend.

Graeme Roberts, Deputy Editor, Just Auto