Hyundai Motor, Kia expected to benefit from Toyota's vehicle certification scandal

Hyundai Motor and Kia headquarters in southern Seoul / Courtesy of Hyundai Motor Group

Hyundai Motor and Kia will likely cash in on Toyota Motor's involvement in a series of vehicle certification scandals. This issue will likely see a rise in demand for Korean cars, particularly in emerging markets such as India and Southeast Asia amid the tainted corporate image of the Japanese automaker, said company officials and experts Tuesday.

The outlook came in reaction to Toyota's latest apologies for cheating on certification tests on seven models. In January, the Japanese firm also came under fire for reporting false data in its diesel engine certification test for 10 of its models.

Market insiders said the sequential involvement in such scandals will drastically hamper the firm's unwavering image as the world's top-selling carmaker.

They expect that the Hyundai Motor Group will benefit from the Toyota scandal in strategic marketplaces.

"The Korean automakers will attract more attention from local customers in India and major Southeast Asian markets following the latest Toyota scandal," Lee Ho-geun, an automotive engineering professor at Daedeok University, said. "When a strong earthquake and tsunami struck Japan back in 2011, major Japanese carmakers — including Toyota — were hit hard by subsequent disruptions in their parts supply chains. At that time, Volkswagen benefitted most from the production fall from its Japanese counterparts."

Toyota Motor Chairman Akio Toyoda bows at the start of a press conference in Tokyo, Japan, June 3. The automaker held a press conference after Japan's transport ministry said it found authentication fraud in processes conducted on pedestrian protection tests in three current models and tampering with test vehicles in crash tests in four past models at Toyota. EPA-Yonhap

Given Hyundai Motor Group's enhanced profile in global markets, such as the two strategic regions, the Korean company will be able to further boost its sales and cement its image as a more reliable automaker there, according to Lee.

Even though Toyota is still considered an unmatched leader in the global auto industry in terms of sales, Hyundai Motor and Kia are on track to narrow the gap by targeting emerging marketplaces.

According to data from the Vietnam Automobile Manufacturers' Association, Hyundai Motor sold the most vehicles in Vietnam in 2023, outnumbering Toyota by around 10,000 during the same period.

Officials from a carmaker said Hyundai Motor Group will be the biggest beneficiary of the latest Toyota scandal, as the company is also rooted in the same Asian region and is rapidly emerging as a major threat to global carmakers due to its outstanding sales growth for the past decade.

Hyundai Motor Group is on track to tighten its position as one of the world's top three carmakers in terms of sales, following Toyota and Volkswagen, the officials said, noting that the group's brand image is being renovated with its group-wide drive to lead future mobility.

They added that the company is also betting big on electric vehicles and seeks to reshape its identity as a software-driven vehicle firm and that Toyota's involvement in such scandals will be a good opportunity for Hyundai Motor and Kia to raise their global profile in this auto paradigm shift.

Backed by the drive, the Korean firm achieved an eye-catching operating profit-to-sales ratio of 10.4 percent in the first quarter, which is the highest among carmakers across the globe.