Hyundai Motor forced to cut prices in China

Hyundai Motor’s Tucson SUV

By Park Jin-hai

Hyundai Motor, which is struggling in China in fierce competition with local brands armed with cheaper prices, has cut its prices by more than 30 percent for its models there.

Dongfeng Yueda Kia Motor, a joint venture between Dongfeng Motor Corporation, Kia Motors and Yueda, dropped the price for its Sportage SUVs from Aug. 7 by 50,000 yuan (9.38 million won).

It is the first time that the firm has offered such a sizeable discount.

So far, the world’s fifth largest carmaker has been slow in providing incentives, because it was aiming to set a premium brand image.

Beijing Hyundai also has cut the price of its Tucson SUV by 23,000 yuan.

Industry insiders say that Hyundai has thrown this last-resort effort to recover its dwindling market share in the world’s largest automotive market.

“It seems that the automaker is trying to steal customers with aggressive pricing, when global carmakers including General Motors and Volkswagen all provide their vehicles at a discount.”

Kia Motors’ Sportage SUV

Hyundai says the price cut has been aimed to clear stock, as the two companies are rolling out new models soon. A new Sportage will be launched in China next month and a new Tucson will also be launched in mid October.

“Ahead of the new model launches we have cut the price for the Sportage. This model is more than 10 years,” said a Kia official.

However, some voiced that cutting the price could work adversely, since unlike incentives, if a carmaker cuts the price for the car, it is not easy to raise it.

Other global car brands in China also offer discounts. GM cut 10,000 -54,000 yuan on 11 models but the discount is not as large as Hyundai’s.

Kia Motors’ K5 sedan

In comparison, for the models heading for a change, Hyundai motors gives about a 4 million won discount for local customers.

“As Chinese carmakers sell at extremely low prices and global carmakers have joined in the discount race, we had no other choice. In our case, the discounts look larger because those models are outgoing ones in the latter half of this year,” the Kia official said.

Hyundai Motor Group plans to diversify its models with better fuel efficiency and performance that caters to the market trend there.

It said It will focus marketing in September, which is the busy season of the auto industry there, in conjunction with the release of the new Tucson and the new K5 in October.

“We have moved up the production and the launch of new the Tucson by a month. Starting production this month, we will put the popular SUV on the market by September,” the official said.