SOUTH KOREA: Hyundai abandons Japan as Toyota surges in Korea

By just-auto.com editorial team | 30 November 2009

Hyundai Motor may be gaining on Toyota in the global car industry but the competition between the two companies remains lopsided in their Asian base markets, where the Japanese maker firmly holds the upper hand, a Korean newspaper said on Monday.

The inevitable became reality last week when Hyundai officially announced that it is pulling out from the Japanese car market, where it continued a muted presence since 2001 and failed to sell 800 cars through October this year. Although it won't be selling new cars, Hyundai will continue to provide services to its existing Japanese customers, company officials told the Korea Times.

"We have concluded that it would be better to halt our investment in a struggling market, and focus on more promising markets such as the United States and China,'' a Hyundai Motor official said.

In contrast, Toyota has established itself as one of Korea's most popular imported auto brands, thanks to the strong sales of its Lexus premium models, the paper said.

In recent months, Toyota has also been successfully leveraging its presence to the mid-priced segment, which has been traditionally dominated by Hyundai and other domestic carmakers.

The company introduced four new models in Korea last month, including the Camry mid-sized sedan and the Prius hybrid and needed sold over 5,000 units of the newly-released models in just three weeks.

Toyota is not the only Japanese auto brand enjoying growing popularity among Korean drivers. Honda led all imported brands by selling about 12,350 cars last year. Combining the sales of Toyota and Nissan, more than 21,000 Japanese cars were sold in the Korean market last year, and it seems all but assured that the number will be significantly bigger by the end of this year, the Korea Times said.

The paper said most Korean industry watchers expect Hyundai to regroup and reenter the Japanese market in two or three years.

An adjustment in business strategies will also be critical, industry observers believe. Over two-thirds of passenger vehicles sold in Japan are small cars but Hyundai has been stubbornly building its business strategies around mid-sized cars in the past years.

The Hyundai-Kia Automotive Group, which includes Hyundai and smaller affiliate, Kia Motors, is currently Asia's biggest carmaker after Toyota and edged out Ford in recent months for fourth place in the hierarchy of the global car industry.

From the fourth quarter of last year to the third quarter of this year, Hyundai-Kia sold around 4.5m cars around the world, while Toyota came third with 5.46m units. Volkswagen was top with 5.68m units sold during the period, followed by General Motors, which sold 5.51m cars, the report added.