Small models boosting Hyundai’s sales in Europe

Small cars like i10 and cee’d gain popularity as Europeans cut back on spending amid debt crisis


Europe’s widening woes is not stopping Hyundai Motor Group’s offensive in the region’s contracting car market where the Korean auto giant continues strong growth.

Demand for new passenger cars in Europe was down for the eighth consecutive month in May, according to the European Automobile Manufacturers’ Association.

With new registrations falling 8.7 percent from April, most European car makers suffered further declines in sales.

But the popularity of Hyundai and Kia brands, both owned by Hyundai Motor Group, showed no sign of abating.

Hyundai sold 34,448 units in May, up 5.7 percent from a year ago, while Kia saw almost 30 percent growth, selling 30,556 vehicles.

Their combined market share of 5.9 percent outdid the 5.2 percent of Daimler, the maker of Mercedes, as well as Japanese rivals like Toyota at 3.9 percent and Nissan at 2.9 percent.

The strong sales were largely driven by exclusive car models that are developed only for European consumers, Hyundai officials said.

Hyundai started stepping up localization efforts since 2007 when the world’s fifth-largest carmaker introduced hatchback models Hyundai’s i30 and Kia’s cee’d first in Europe.

In the early days, the i30 was made in Korea. Then, its production began at Hyundai’s Czech plant since late 2008, providing its Europe sales a new momentum.

Together with the i30, which has become available in Korea as well, the company also started offering smaller versions ― i10 and i20 ― that had previously been sold only in India.

With their growing popularity, Hyundai plans to almost double the current production capacity of its European plants in Turkey and the Czech Republic by next year.

For Kia, the cee’d hatchback claims some 30 percent of the brand’s total car sales in Europe.
 

Officials especially pinned high hopes on the refurbished new cee’d, which was launched in June, as they predicted the model would boost company’s strong sales overall.

“European consumers prefer small hatchbacks. Coupled with recent fuel price hike, they has just begun to recognize the strength of Hyundai cars,” said a group spokesperson.

“We expect the downsizing trend in cars would continue in the coming months. We are pouring more resources in strengthening brand awareness.”

Industry sources also predicted Hyundai’s strong performance was unlikely to subsidize anytime soon.

“Due to negative factors like Greece’s debt crisis and Spain’s credit downgrade, the slump in the European car market could deepen further,” said Choi Joong-hyuk, an analyst at Shinhan Financial and Investment.

“Hyundai Group, however, is expected to see stable growth following the Korea-EU FTA, new launches, expansion of production lines.”

Hyundai’s dynamic also seems to be coming from the strong leadership of the group chairman Chung Mong-koo.

When he visited Europe in March, Chung said: “The solution to the global slowdown in cars sales should be sought in Europe, the place where the crisis started. If we find a way in Europe, we also can fight globally.”



Exclusive models in other regions

Except the cars unique to the Europe market, Hyundai has also offered exclusive models across regions in recent years.

In order to meet the lifestyle in India, Hyundai launched the 800 cc mini car Eon there since 2011, together with i10 and i20.

In Russia, the small car Solaris was developed after considering the nation’s road and weather conditions. Since its debut in 2010, its deliveries surpassed 120,000 units last year.

In China, Hyundai redesigned its compact car Elantra into the Yue Dong with an updated exterior, while Kia introduced K2, a Chinese-version Pride.

Both models make up more than 20 percent of the group’s total Chinese sales.

“These cars were launched as part of our global strategy and they are sold well as expected. Bringing them to Korea is always open depending on our strategic decision,” the Hyundai official said.

By Lee Ji-yoon (jylee@heraldcorp.com)