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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.

How feasible is Hyundai's HCD-15 Santa Cruz pickup?

When the silk finally slipped off Hyundai's HCD-15 Santa Cruz concept at the Detroit Auto Show on Monday, it was tangible, four-wheeled confirmation following years of rumors that the Korean automaker has been investigating the pickup market. Yet despite strong early critical and online reception, the likelihood of a production Hyundai pickup remains muddy at best. To be clear, Hyundai officials tell Autoblog there's nothing remotely production-ready lurking below the Santa Cruz's skin – it's a what-if concept designed to gauge customer reaction. But company officials say Hyundai is seriously investigating the possibility of a production pickup, and the company firmly believes that there's a market for a small, efficient unibody truck. According to John Krsteski, Manager at Hyundai Design North America, who spearheaded the project, Hyundai "is spending a lot of time right now still going through some studies on which types of platforms – whether it's a unique platform. It could be based on something like a Tucson ... we've looked at several different options." While Krsteski indicated that a platform hadn't been arrived at – and would likely need modifications – he says "it's definitely feasible." The Santa Cruz concept has a number of eye-catching features that would seem tough to produce – namely the slide-out rear bed extender that Krsteski says was influenced by the drawer-style ovens and dishwashers increasingly found in high-end kitchens. "We've had a couple of engineers in the studio and we did some study models on it, and we do think it's feasible – especially based on how we could package that inside there." With the extension in place, the small bed is large enough for a motocross bike to fit in on an angle. So what's next for the Santa Cruz? Hyundai has some internal studies it has completed and others that remain ongoing, and the company will work to gauge consumer response to the vehicle at auto shows and other events. Hyundai Motor America is clearly excited about the California-born project, but the toughest hurdle to a production pickup will likely be getting approval from headquarters in Korea. To that end, we've been led to understand that it was both telling and strategic that the Hyundai press conference was packed with Korean executives, who were on-hand in part to gauge media reaction to the Santa Cruz.

Hyundai plant one of 100 factories shutting down in wake of Beijing pollution scare

Many factories and chemical plants have suspended production in Beijing in an attempt to curb dangerous pollution, according to the South China Morning Post. The air pollution is some of the worst the city has seen in years, with harmful PM2.5 particle rates hovering between 200 and 400 micrograms per cubic meter. That number is down from as high as 886 on Sunday. For contrast, the US Environmental Protection Agency regulations say PM2.5 concentration at any location be no higher than 65 micrograms per cubic meter, with average maximums not to exceed 15 micrograms per cubic meter.
China blames the pollution on vehicle emissions, industrial production and an increase in domestic coal use to heat homes during cold weather. A total of 48 work sites, including construction zones, metal refineries and chemical plants have suspended production, and 41 factories have cut back production as well. That includes Hyundai Motor Beijing, which suspended production on Sunday.
Even so, the area's children's hospitals are receiving up to 10,000 patients per day with respiratory ailments. The city's government says it is in the midst of an eight-year plan to curb pollution and that levels have dropped between 30 and 70 percent over the past 14 years thanks to its actions.