Hyundai Motor will accelerate the launch of a sport-utility vehicle (SUV) and may locally assemble its premium Genesis cars and will open its first Chinese brand store, sources said as the Korean car company has been bruised by anti-Korean sentiment in its biggest market and losing ground to local automakers.
In China, many see Hyundai as a lower-end maker of city taxis and these measures are aimed at rebooting the South Korean firm’s branding there.
Recent sales have been hit by a consumer backlash over South Korea’s deployment of a U.S. anti-missile defense system which Beijing opposes even though Hyundai and its affiliate Kia Motors were not long ago ranked third among foreign car brands in China.
Broader problems like poor brand recognition and a model line-up struggling against local brands’ cheaper SUVs, of the company are masked by the diplomatic row, analysts say.
“Hyundai has an in-between brand that doesn’t have a clear identity in China, and there’s the backdrop of poor China-Korea relations,” said James Chao, Shanghai-based Asia-Pacific chief of consulting firm IHS Markit Automotive.”Newly introduced SUVs should help, but they are late to the game.”
Noting the lowest in eight years, Hyundai/Kia’s China market share tumbled to 8.1 percent last year even before the missile systems row. It has slid further to 5 percent this year.
Beijing’s 798 Art District, a trendy hub of refurbished factory buildings, is where Hyundai will in September open a brand experience center to help its identity crisis. There are three similar centers of the company in Seoul and one in Moscow.
“We’re not going to show a real car. This space is only for focusing on brand building,” Xu Jing, the Hyundai executive in charge of the project, said.
And as local automakers and European brands gain ground, completion of the center is now a key plank in Hyundai’s efforts to regain a lost position in China even though it was planned before the recent political tensions. Looking to move upmarket in China are Volvo-owner Geely and Great Wall Motor.
Territory traditionally held by premium names such as Daimler’s “Mercedes me” stores and BMW’s brand centers, already in China is the area that the branding will venture into.
Sources also said that import tariffs will be more than halved at 10 percent as Hyundai is also planning to assemble Genesis cars in China and hence considering using complete knock-down (CKD) kits shipped from South Korea.
Prevention of technology getting leaked to its local joint venture partner, BAIC, would also be possible by building Genesis cars from kits in China.
One Hyundai insider said that the kits are a first step. “We are agonizing over how to source local parts and secure enough sales to build the Genesis cars.”
Two years ago, Hyundai spun Genesis off with the larger Equus sedan into a standalone premium brand after having launched the luxury sedan in 2008. Genesis would launch in China within 2-3 years, brand chief Manfred Fitzgerald said last year.
Hyundai plans to have six models including a sports sedan and two SUVs under the premium marque by 2020 but has not decided which Genesis model it will build in China first.
“While the Genesis brand is reviewing a variety of strategies for the China market, no specific decisions have been made yet,” Hyundai said in a statement.
Down from 1,016 in 2015, Hyundai sold 74 Genesis sedans in China last year.
(Adapted from Reuters)