If available and priced well, a production version likely would be built in China or simply cater exclusively to the Chinese market. Though Hyundai enjoyed brisk growth since it entered China in the last decade, new domestic and global rivals have made that difficult more recently.
As recently as 2013, Hyundai and its affiliate Kia had more than a 10% share of the world's largest auto market and combined sales exceeding that number. Most of this winning streak was anchored by models like the Elantra (affordable, fuel-efficient and dependable) and Sonata. But by 2022, Hyundai's share had eroded around just a couple of percent and volume was down to below 400,000 units. The sharp fall is primarily thanks to changing consumer tastes, the move towards electrification (EVs), and competition heating up out of China via brands like BYD and Geely.
Hyundai's slow embrace of electric cars compared with local competitors is a key handicap in China. Hyundai has seen its sales fall behind faster-growing electric rivals as it lags competition with a limited lineup in the growing market, where EVs are expected to account for more than 30% of total vehicle sales by 2025. If Hyundai wants to keep a loyal buyer base in the long haul, it would have to convert its operations much faster than what industry terms like 'product diversification' or 'market adaptation' suggest. The launch of models such as the Ioniq 5 are a move in this direction, but with local marques dominating China's burgeoning EV space Hyundai has its work cut out.
Cost has also become a main point affecting the competitiveness of Hyundai. Chinese consumers have been increasingly splitting in two: choosing either premium brands as BMW and Mercedes-Benz, or budget-friendly local carmakers. Where once Hyundai sat in the middle, it has found vying to remain relevant (not least a focus on family-only vehicles). Part of the problem with this pricing issue is that many Chinese automakers are now offering so much more for their money, just as a result of how good economies of scale currently work there. Although it is the market leader which has led to an increase in technology and value overseas, domestic models like Geely Emgrand or BYD Qin have outscored Hyundai with features.
Hyundai has its share of strategic missteps that have led to a loss in marketshare. One of the biggest was Chinese-South Korean political tension in 2017 stemming from THAAD missile defense system deployment. As a consequence of that, South Korean products were boycotted by the consumers and Hyundai car sales dropped significantly. While the situation has normalized in recent years, it certainly never regained its eroded market share.
The Germans learned their lesson, and industry experts say Hyundai needs to do the same -- only this time more effectively localizing its strategy. According to Bill Russo, CEO of Automobility Limited: “In China — success is not only about global products but customizing those products and supporting strategies for the domestic customers. To counter this, Hyundai has created joint ventures with the likes of Beijing Hyundai and sold cars which it specifically designed for local taste such as the ix35 SUV But those have also not entirely rebuilt the successes of yesteryear.
Addressing its woes, Hyundai says it will ramp up R&D in China focused on connectivity and new energy vehicles (NEVs), referring to electric cars as well conventional models with electrification such hybrid or plug-in features. Last year, Hyundai detailed plans to introduce more than 10 NEV models to China by 2030 as a means of accommodating the market's transition towards greater electrification. Nonetheless, local brands already control the NEV sector in China so Hyundai has a lot of catching up to do here.
Hyundai China provides a lot more detail into that company's plans and product mix, for those in the know or who are interested. Though Hyundai is working hard to correct the situation, these changes mean that as 2019 begins, there are some serious headwinds facing the brand in China and they could influence whether Koreans can regain their marketing momentum or remain small players in what continues to be the worlds largest automotive arena.