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How Hyundai lost momentum, and will 'take a few years' to recover

SEOUL/DETROIT/CHONGQING, China — At a near-empty Hyundai Motor showroom in the Chinese mega city of Chongqing, the store manager is grumbling about his shortage of customers and a lack of bigger, cheaper SUV models popular in the world's largest auto market. Even with discounting of as much as 25 percent, his dealership was selling barely a hundred vehicles a month, said the manager surnamed Li. A nearby Nissan dealership was selling about 400 vehicles a month, a store manager there said. "The sales are simply poor," Li told Reuters. "Look at the Nissan store next door, they have tens of customers while we just have two." An hour's drive away is Hyundai's massive $1 billion manufacturing plant, which opened last year with a target to produce 300,000 vehicles per year. But with sales weak and the Chinese auto market slowing sharply, the factory is running at roughly 30 percent of capacity, two people with knowledge of the matter said. The sources asked not to be identified because the information was not public. Hyundai, the world's fifth largest automaker, declined to comment on the Chongqing plant's production or the showroom's sales but said it is "closely cooperating" with local partner BAIC to turn around the China business. BAIC did not respond to requests for comment. Hyundai's woes mark a major reversal for the automaker which was an early success story in China as it quickly and cheaply rolled out popular new models into a surging market. In 2009, Hyundai and partner Kia's combined sales ranked third in China after General Motors and Volkswagen. The South Korean duo now ranks ninth, and its market share in China was 4 percent last year, from more than10 percent at the beginning of this decade. Executives and industry experts say Hyundai conceded its once stronghold in the low-end segment to fast-growing Chinese rivals such as Geely and BYD. Foreign rivals not only defended their turf in premium segments but also kept pricing competitive for mass-market models, squeezing Hyundai's positioning as an affordable foreign brand, they said. In the United States, the world's second-biggest auto market, Hyundai's market share fell to 4 percent last year, near a decade low. Hyundai ran into problems in China and the United States for similar reasons: It missed shifts in consumer tastes, especially the surge in demand for SUVs, and it sought higher prices than its brand image could command, four Chinese dealers and half a dozen former and current U.S.

South Korea firms up fuel economy regs following Hyundai/Kia debacle

According to a report from Reuters, South Korea's government has drafted strict new rules for automakers to follow when calculating fuel economy. The legislation comes after a major snafu by Hyundai and Kia that resulted in the automakers lowering the estimated fuel mileage of many popular models - some by several miles per gallon, including the Soul subcompact above - and compensating owners in the US and Canada for the reduction.
The new fuel economy rules were announced by the Ministry of Trade, Industry and Energy in South Korea and will see average mileage ratings drop by roughly three to five percent, according to the report. In addition, manufacturers found guilty of overstating mileage figures will be liable for fines of up to $900,000.
These sweeping new regulations will go into effect in the second half of 2013 and, while they won't have any effect on EPA estimates for Hyundai and Kia vehicles in the United States, they are expected to result in new ratings for the two automakers in their home market of South Korea, where they enjoy a whopping 70-percent market share.

Hyundai reveals new Sonata Hybrid in Seoul

The wraps are off Hyundai's next-generation Sonata Hybrid after an unveiling in Seoul, South Korea, and the latest model brings an improved powertrain and slight styling tweaks. In the Korean domestic market, the Sonata Hybrid relies upon a 2.0-liter, four-cylinder gas engine producing 154 horsepower and 140 pound-feet of torque with a 51-hp electric motor providing the rest of the thrust. Hyundai isn't revealing net system output at the moment, and it isn't saying whether we will get this powertrain in the US yet. Company spokesperson Jim Trainor tells Autoblog that those details will likely be announced at the model's North American debut at Detroit Auto Show in January. Sales are expected to begin in the spring. In addition to the upgraded engine, there's an improved six-speed automatic that houses most of the hybrid components and uses a new clutch to reduce drag. The switch to an electric oil pump also removes some inefficiencies, and the battery pack underneath the trunk has been enlarged to 1.62 kilowatt hours, up from 1.43 kWh. Despite the capacity increase, Hyundai claims there's 10.5 percent more cargo room back there. The Sonata's design gets a slight rethink to improve fuel economy, too. Up front, the redone nose features a new mesh grille in a more rectilinear frame, and out back, there's a set of unique taillamps, a lip spoiler and a unique rear diffuser to go along with the full underbody cover that only the pavement sees. If anything, the new hybrid model looks more traditional to our eyes than the standard gas-powered Sonata, which comes as something of a surprise, especially as the previous-generation Sonata Hybrid was markedly more futuristic and divisive in its appearance. In any case, we expect the looks to remain largely the same for the US version, which will likely arrive wearing a 2016 model-year designation. All of the upgrades, boost fuel economy to 18.2 kilometers per liter on the Korean cycle, the equivalent of about 42.8 miles per gallon. Comparatively, the current Sonata Hybrid in Korea is rated at 16.8 km/l (39.5 mpg). Hyundai will also make a big expansion to its electrified slate next year. In addition to the standard Sonata Hybrid, a plug-in version will come later in 2015 – the automaker's first. More details will arrive about the model in Detroit.