Hyundai Motor Cuts Sales Target in China
By Ryu Jin
Staff Reporter
Hyundai Motor, the top South Korean automaker, has declared an ``all-out war’’ in China with additional price reductions. It has even lowered its sales target there from 310,000 to 260,000 this year, according to sources on Monday.
Industry sources said that Beijing Hyundai, the carmaker’s unit in China, has readjusted its annual sales target to 260,000 _ for the first time since its launch in 2002.
Early this year, Beijing Hyundai set its sales target of 310,000 for 2007. It sold 290,088 vehicles in the neighboring country last year.
But the ambitious plan has gone wrong amid fierce competition there. Monthly sales of Beijing Hyundai, which ranked second in June 2005, tumbled to seventh in March this year before being ousted from the top 10 list in April.
Company officials attributed the poor performance to worsening competitiveness due to the price-cutting competition among its rivals and the increase in the number of rival models produced by other makers as well as weak brand recognition in China.
Hyundai Motor has recently instituted an ``emergency system’’ for sales in China, having Vice Chairman Seol Young-heung, who is in charge of the automaker’s Chinese operation, and Beijing Hyundai President Noh Jae-man take the lead.
In May, the company began to provide bold incentives to its dealerships with reductions of 10,000 yuan (1.24 million won, or $1,325) for a Sonata and 7,000-8,000 yuan for an Avante (Elantra in China), in an effort to counter the pricing of its rivals.
The company’s monthly sales still remain far below 20,000 despite the price reductions, posting 13,000 in June and 16,000-17,000 in August and September. Beijing Hyundai’s monthly sales topped 24,000 on average last year.
Given the poor business performance to date, the lowered goal of 260,000 is not an easy target. Beijing Hyundai would have to sell more than 28,000 cars in each of the remaining four months to achieve the goal.
As part of efforts to boost sales, it decided to reduce prices of main models the Avante (Elantra), Sonata and Verna by 5,000-16,000 yuan from September. An Sonata, for example, would see a reduction of 16,000 yuan (2 million won).
``We hope the monthly sales will jump far above 20,000 from this month thanks to the aggressive sales strategy,’’ a Hyundai Motor spokesman said on condition of anonymity.
An official at the Korea Automobile Manufacturers Association (KAMA) also praised Hyundai Motor’s move, saying it has a ``strong will’’ to achieve this year’s target, which has been reset to a ``more realistic’’ level.