Hyundai struggles in Europe

Genesis

New models, World Cup demand may increase sales

By Kim Tae-gyu

The European automotive market shows signs of rebound after several years of slump, but Hyundai Motor has failed to take advantage of the recovery.

According to the European Automobile Manufacturer’s Association on Wednesday, Hyundai sold some 35,000 vehicles in Europe last month, down 4.1 percent from a year earlier.

During the first four months of this year, its European sales stood at about 145,000 cars, down 1.6 percent from the corresponding period of 2013. As a result, its market share dipped 0.3 percentage points to 3.1 percent.

That compares to the automaker’s global competitors, which saw their performances improve this year. Only two others ― GM and Honda ― saw their sales drop there this year.

Even Hyundai’s sister company, Kia Motors, sold some 113,000 vehicles this year in Europe, up 6.6 percent from a year earlier.

Hyundai Motor attributed the struggle to the cutthroat rivalries with other carmakers.

“Many companies have cut the price tags of their products to boost market shares in Europe. We are not going to participate in that game, which would end up undermining our bottom line,” a Hyundai official said. “We will not blindly pursue bigger sales at the expense of profitability.”

During a conference call last month, the company’s chief financial officer, Lee Won-hee, came up with a similar explanation.

“We will not splurge for unreasonable promotional activities in Europe. We will stick to our profitability,” he said after announcing lower-than-expected results for Hyundai in the first quarter.

The strong won hurt Hyundai’s price competitiveness in the global market, which led to the disappointing income statements.

The won has been the fastest-appreciating currency in Asia during the past year, as it rose against almost every major currency with the sole exception of the British pound ― it gained almost 10 percent against the dollar.

Hyundai strives to rack up a turnaround with new cars ― it is set to launch the new Genesis in the second quarter and the i20, a dedicated model targeted for European motorists, later this year.

“Recently, we doubled the annual capacity of our Turkey plant to 200,000 vehicles so that it will be able to roll out the new-type i20 for European drivers,” said the Hyundai representative.

“In addition, the Brazil World Cup will help Hyundai raise its brand recognition in the European market, where football is highly popular.”

Hyundai and Kia are official sponsors of the Brazil World Cup, which kicks off in June. They have also extended agreements with the world football governing body, FIFA, to an unprecedented long-term commitment under which they will sponsor the World Cup in 2018 and 2022.

Hyundai and Kia will be able to enjoy exclusive marketing opportunities and global media exposure during the quadrennial event.