In a difficult year for the automotive industry,
gained momentum in 2020, helped by a slate of new sport utility vehicles that resonated with American buyers.
The South Korean car manufacturing giant, which sells vehicles under two separate companies, Hyundai Motor Co. and its subsidiary
Motor Corp. — grew its U.S. market share more than any other major automaker through November and held retail sales flat during the period, defying the broader industry’s 12% decline, according to market research firm JD Power.
As investors paid particular attention to electric vehicle startups, shares of Hyundai and Kia, listed separately on the Korea Stock Exchange, also rose in 2020, climbing 67% and 49%, respectively, to Tuesday’s close and outperforming other mainstream automakers such as
General Motors Co.
“The market is down for everyone, but they seem to be coming out the strongest,” said Vanessa Ton, senior manager of industrial intelligence at research firm Cox Automotive.
Hyundai and Kia have worked for years to raise their profile in the United States, where both started out as budget brands selling to price-sensitive buyers. Both enjoyed some success early in the last decade, redesigning their sedans with a new look and improved fuel economy, helping them boost sales.
But brands have been slow to turn to SUVs as demand for these vehicles has taken off, leaving them with heavy sedan ranges that have waned in popularity.
In recent years, the group’s executives have redoubled their efforts in North America, sharpening their focus on SUVs and attempting to move upmarket with the launch of a separate luxury brand, Genesis.
When Covid-19 hit the United States this year, Hyundai relaunched a promotion, similar to one introduced during the 2008-09 financial crisis, to reassure buyers worried about the economy. It offered to cover up to six months of payments for shoppers if they lost their jobs due to the impact of the pandemic.
The brands have also benefited from fewer pandemic-related disruptions at their factories in Korea, which build many models for the US market, and a reputation for selling feature-packed vehicles at a lower price than competitors. , a formula that has given them an edge during economic downturns, executives and dealers say.
“Even though they’ve become more mainstream and more upscale, they’re still trying to promote their value,” said Jessica Caldwell, analyst at car shopping website Edmunds.com.
Like other automakers, Hyundai and Kia’s overall U.S. sales were hit by a sharp drop in car rental business. But the decline was not as steep as that of the industry as a whole.
Strong retail sales (purchases made by individual customers) helped lift the combined U.S. market share of the group’s three brands to 8.6% through November, from 7.8% over the same period. a year ago and its highest level since 2012, according to the research firm. intelligence services. Automakers are expected to release year-end U.S. sales results on Tuesday.
Both companies have also bolstered prices by cutting overall spending on discounts and broadening their brands’ appeal to more affluent buyers by selling larger, more expensive SUVs, analysts said.
The share of Hyundai buyers with household incomes over $100,000 was 43% this year, up from 33% five years ago, according to Cox Automotive data. For Kia, that share rose to 36% from 23%, according to company data.
“We try to highlight the quality of our products rather than just sell the case,” said José Muñoz, Hyundai’s global chief operating officer.
Much of the recent strength has been driven by the release of two new SUVs – the Kia Telluride and Hyundai Palisade– which won praise from auto critics and remained in high demand throughout the year, dealers say.
The automaking group has also added other SUVs in recent years, including subcompacts like the Hyundai Venue, which is designed to appeal to younger, more budget-conscious buyers. Hyundai and Kia now sell a dozen SUV models in the United States, up from six five years ago.
Ryan Gremore, president of O’Brien Auto Team of Illinois, which owns Hyundai and Kia dealerships, said some of the group’s new models, like the Kia Telluride, are helping to change customer perceptions of the two brands. .
“Consumers didn’t view Kia as the ‘bad credit‘ brand it was,” Gremore said.
The challenge now for Hyundai and Kia will be to maintain recent market share gains as rivals regain a foothold and replenish depleted dealership inventory. Covid-related factory closures this spring, analysts say. And leaders are still wary of the sustainability of the market recovery.
Past quality issues also continue to weigh on the two Korean automakers, weighing on their profits.
This fall, Hyundai and Kia agreed to pay up to $210 million in civil penalties as part of a settlement with U.S. safety authorities, who say the two brands failed to timely recall 1, 6 million older model vehicles for engine problems.
The two companies set aside more than 3.6 trillion won, or the equivalent of $3.2 billion, this fall to cover expenses related to engine problems on older models, some of which the National Highway Traffic Safety Administration is still investigating after receive vehicle fire reports.
Hyundai said it was cooperating with the investigation and would work closely to resolve the issues with regulators. Kia, in a statement, denied it was slow to recall vehicles and said it had settled with regulators to avoid a lengthy legal dispute.
Despite these headwinds, investors have come to terms with equities, encouraged by recent strength in the US market and Hyundai aggressive push in electric vehiclesanalysts say.
In August, Hyundai announced it would create a new sub-brand for electric vehicle sales in 2021, with three battery-powered models planned over the next four years. Its stock jumped 15.5% in trading the day after the announcement.
Muñoz said the company was behind on SUVs, but has learned its lesson and wants to be ahead on electric cars.
“We don’t want to be quick followers,” he said. “We want to be pioneers.
Write to Ben Foldy at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8