BEIJING – Beijing-Hyundai Motor Co., Ltd. has decided to cut its 2017 sales target by 450,000 units to 800,000 units after a lackluster first half of 2017 in part caused by the political fallout from South Korea’s THAAD defense system and rising competition from Chinese domestic brands.
The company is likely to officially announce the decision in early August, reported China Auto 30 Think Tank.
The Sino-Korean joint venture sold just 300,000 vehicles in the first half of 2017, down 42.4 percent from a year earlier, or less than a quarter of its previous annual sales target of 1.25 million units. Trying to sell 500,000 vehicles in the second half of 2017 looks to be equally difficult.
Hyundai Motor’s Q2 2017 net profit fell 48 percent to 914 billion won, while global vehicle sales fell 8.2 percent in the first half of 2017 to 2.2 million units. The huge decline in sales in China has obviously negatively affected the brand’s global sales performance.
Since March, Beijing-Hyundai has offered discounts to different extent on all vehicle models and recently rebate measures have been increased. Sales volume of some models has recovered, and the best-selling model now is the new Tucson SUV. However, because of the obvious decline in sales, most Beijing-Hyundai dealers were losing money in the first half of 2017. The loss of the single store was about ¥1 million and the loss of a single vehicle model was about ¥6,000
Jones Zhong, a senior automotive analyst, believed that the basic reason why Korean vehicles got into trouble in China was the lack of product power, and design and innovative technology highlights were not well reflected. Other experts thought Korean vehicles were behind many OEMs and needed to accelerate new energy vehicle development.
Currently, Hyundai has two big problems in China. One is that the speed of innovating new products is too slow with no major updates to vehicle models, with configurations often adopting earlier designs, high-end models are showing fatigue and some popular models cannot be introduced to the Chinese market quickly enough. The other is that the product power is weaker than competition and the original advantages in high performance-cost ratio, exterior design and other highlights have been gradually weakened by competition.
Mei Songlin, vice president and managing director of J.D. Power China, said that an improvement in political environment and product lineup could help the Korean brand.