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Hyundai sales slump in China over North Korea, standoff with Chinese partner

BEIJING/SEOUL — Hyundai is at loggerheads with its Chinese partner over efforts to cut supplier costs, as they grapple with cutthroat competition and the impact of a standoff between Beijing and Seoul. Hyundai, along with affiliate Kia, has been caught up in a political row over a missile defense system that is being deployed in South Korea, but opposed by China, as tensions grow over North Korean missile tests and last week's test of a nuclear bomb the North claims can be mounted on a missile. Sales of Hyundai cars in China have been falling, part of a backlash against South Korean brands over the missile system that China views as a threat to its own national security. On Tuesday, South Korea asked the United States to lift a limit on the explosive payloads it can use in the missile system. This as a North Korean missile, believed to be an intercontinental ballistic missile, was being tracked by intelligence services being moved on the ground toward North Korea's west coast and a possible launch site. That has come against the backdrop of ever tougher competition from local Chinese automakers. Until last year, Hyundai and Kia ranked third in China by sales. But Hyundai's sales alone have slumped 41 percent from January to July, fraying relations with local partner BAIC Motor Corp and making this the biggest crisis since Hyundai entered the Chinese market in 2002. Last month, Hyundai suspended production at its four China plants for a week after a French supplier refused to provide fuel tanks when its bills went unpaid. On Tuesday, Hyundai suspended production at one of its plants in China after a German firm went unpaid. Hyundai and BAIC — whose Beijing Hyundai joint venture is a 50:50 partnership — are divided over how to solve the issue of suppliers and tougher competition. Hyundai wants to protect its South Korean supply chain, while BAIC favors shifting to cheaper Chinese suppliers to cut costs, the people said. "BAIC wants to solve this aggressively and is ... asking Hyundai to change its sourcing strategy significantly and immediately," said the head of a Hyundai supplier based in Seoul, adding the idea was to source more locally from cheaper suppliers in China. Hyundai wants to solve this more gradually "over perhaps 5-10 years and do so in phases," the person said. BAIC declined to comment.

First peek inside Hyundai's hybrid Prius fighter

There are two new vehicle rumors that the auto industry can't seem to get enough of these days: "Tesla fighters" and "Prius fighters." The former category is filled up by Porsche and Audi and more. In the ranks of those who want to take on the world's best-selling hybrid, we can add Hyundai, but this time with a potential twist. First, let's take a look at the latest spy shots of the potentially 2017 model year gas-electric hybrid, including our first look inside. This car will be based on the next-generation Elantra that is also supposed to arrive in 2017. Rumor has it that a medium-sized lithium-polymer battery pack could offer 38 electric miles before the 1.6-liter engine takes over. The new hybrid will likely have a new name and could appear at an auto show at some point in 2016. We've seen other versions of this Prius fighter disguised in different camo. If you'd like to compare the vehicles, you can do so here and here (the latter shows modified Elantra GTs). Now, what about that twist? Well, alongside the standard gas-electric vehicle, it appears that Hyundai might also be working on an all-electric version of its "Prius fighter." Wearing the "AE" moniker, the all-electric version isn't guaranteed to arrive when the gas-electric car does, and may show up later, according to Green Car Reports. This all fits with Hyundai's promise, in 2014, to introduce a new all-electric car for the US market. We won't be surprised if it has wireless charging, too.

All the Hyundai Santa Cruz needs now is the green light

Ever since Hyundai took the wraps off the Santa Cruz concept nearly a year ago, we've been closely watching to see if the Korean automaker would put it into production. The signs have been looking good, but this could be our clearest indication yet. According to the company's North American product planning chief, the road ahead is clear for the compact pickup. "We're very anxious to do something with the idea," Mike O'Brien told AutoGuide. "The engineering feasibility work has been done," and 18 months of preparation have already gone into laying out the business case. Now all it needs is the green light from the head office. Hyundai unveiled the Santa Cruz concept – codenamed HCD-15 – at the 2015 Detroit Auto Show. The design calls for a compact pickup crossover, similar in concept to the Honda Ridgeline, but smaller. It would be targeted towards young customers interested in outdoor activities who don't want to track the elements inside their vehicle along with their mountain bikes, kayaks, surfboards, and snowboards. If approved, the Santa Cruz would likely share its underpinnings with the Tucson crossover. Hyundai sells a good 50,000 Tucsons each year in the US, and the Santa Cruz is estimated to match (if not exceed) that number, helping Hyundai double its sales based on the same platform. The Santa Cruz is also tipped to be Hyundai's first diesel model in America. "The diesel is the most promising because of the fuel economy it delivers," said O'Brien. "It best matches in our research of what these customers are looking for... Outstanding fuel economy, good torque and good driveability."