Hyundai Motor Group's goal of establishing Genesis as a premium brand that resonates in the global market has encountered a red light. Recently, as the United States confirmed a 15% tariff rate on Korean-made automobiles, there is a situation where increasing local production becomes necessary, but the upcoming passage of the 'yellow envelope law' (revisions to Articles 2 and 3 of the Labor Union and Labor Relations Adjustment Act) raises the possibility of being hindered.
According to the completed automobile industry on the 11th, Genesis sold 44,048 units in the United States from January to July this year. This figure represents a 15.9% increase compared to the same period last year. Last year's sales reached 75,003 units, marking a record high with an 8.4% increase from the previous year. Domestic sales, however, saw a decline of 11.7%, totaling 69,341 units by July this year. While Genesis has struggled domestically, it is showing rapid growth in the largest global market, the United States.
Genesis is producing vehicles for export to the United States domestically, excluding the GV70, a mid-size sport utility vehicle (SUV). With the U.S. imposing a 15% tariff, it has found itself at a disadvantage in the competition with Japan's Lexus, which has been manufacturing cars in the U.S. since 2013.
The internal combustion and hybrid models of the mid-size sedan ES are produced at the Toyota Kentucky plant. Lexus is launching the TX, a mid-size SUV, as a dedicated model targeting the North American market, which is being manufactured at the Toyota Texas plant.
Toyota has five finished car plants in the United States, with a local production ratio reaching about 55%. Thus, a 15% tariff is applied, similar to Hyundai Motor's, but it appears that Toyota will reduce tariff burdens by adjusting or expanding production lines at its existing plants to increase local production.
Genesis's prices in the U.S. are higher than those of competitive models from Lexus. According to the automotive information platform Edmunds, the starting price of the Genesis GV70 in the mid-size SUV market is $46,200, which is more expensive than the Lexus NX at $40,965. In the large SUV market, the Genesis GV80 is sold for $58,200, while the Lexus RX is priced at $49,125. The price of the Genesis G70 mid-size sedan is $43,450, also surpassing the Lexus IS price of $40,535.
To maintain price competitiveness, Genesis needs to increase its production ratio in the U.S., but if the yellow envelope law passes, there is a significant possibility that the labor union will intervene. The yellow envelope law includes provisions that business decisions affecting working conditions could also become subjects of disputes. While the existing labor union law only considered wages, benefits, and working hours as dispute subjects, if the revised bill is enacted, it could allow for strikes to obstruct the transfer of production facilities abroad.
Hyundai Motor Group has been operating a dedicated eco-friendly vehicle plant, Meta Plant America (HMGMA), in Georgia, U.S., since October last year. Most of the electric vehicles sold in the U.S. are planned to be produced at this plant in the future. From the perspective of Hyundai Motor's labor union, losing export volumes for electric vehicles could reduce overtime pay, especially if Genesis also moves to production in the U.S.
An industry insider said, "Although Genesis has recently been expanding its reach into India and Southeast Asia, if growth in the U.S. market slows down, it will realistically find it difficult to establish itself as a global brand."