The Hyundai Motor Group's domestic and overseas business sites are showing mixed results. In the United States, it recorded the highest sales ever last month, while in Korea, the labor union has entered a strike for the first time in seven years, predicting a disruption worth hundreds of billions of won. With the U.S. business thriving, management uncertainty due to the strike could act as a factor in increasing the speed of production localization.
On the 3rd (local time), Hyundai Motor Company's North America division announced that its sales in August totaled 88,523 units. This represents a 12% increase compared to the same period last year, marking the highest total for August ever. Looking at retail sales for August alone, the figure was 79,021 units, an 8% increase from the same period last year. Sales of the Ioniq 5 saw a 60% increase, with electric vehicles accounting for 32% of total sales.
Randy Parker, CEO of Hyundai Motor Company's North America division, noted, "This August was a very special month, with both retail and total sales far surpassing previous August records. We are steadfastly moving toward our best year ever."
Kia's North America division also recorded its highest sales ever last month with 83,007 units sold. The year-on-year growth rate is 10.4%. Sales of popular models like the Carnival, Telluride, and Sportage increased by 29%, 19%, and 19%, respectively, while the electric Sport Utility Vehicle (SUV) EV9 also reached a record 2,697 units. The sales of Genesis, Hyundai's luxury brand, increased by 7% to 7,925 units, also the highest for any August.
However, last month's sales boom was also influenced by a rush in demand ahead of the expiration of electric vehicle tax incentives under the U.S. Inflation Reduction Act (IRA) at the end of this month. Once the subsidies disappear, electric vehicle sales could be affected starting in October.
Korea is walking on thin ice with a union strike after seven years. The Hyundai Motor labor union has been conducting partial strikes since the 3rd due to difficulties in wage and collective bargaining negotiations, planning to strike a total of 16 hours by the 5th. The Kia labor and management are still in negotiations, but they have not narrowed their differences. With Hyundai beginning its strike, there is always a possibility that Kia could join at any time.
The industry anticipates that the current strike could result in sales disruptions worth hundreds of billions of won. Last month, Hyundai's domestic and overseas sales increased by 0.4% compared to a year ago. The domestic growth rate was around 0.4%. Kia's domestic sales increased by 7.4%, but exports decreased by 0.4%, leaving the overall growth rate at 0.8%.
The expansion of management uncertainty due to the union strike is reported to possibly encourage the localization of production by the Hyundai Motor Group. An official from an auto parts company said, "Recently, the Hyundai Motor Group stated that it would increase local production and raise the localization rate of its parts supply chain in response to U.S. tariffs, but the industry believes that the tariffs have actually become a good excuse."
The 25% tariff imposed by the U.S. on imported cars is also a burden. For now, Hyundai bears it without passing it on to consumer prices, but it cannot continue to absorb it indefinitely. Raising sales prices in the U.S. would reduce local competitiveness, so there is a high likelihood of reducing the volume produced and exported from Korea while increasing the proportion produced and sold in the U.S.
Hyundai indicated during its second-quarter conference call in July that it plans to change its parts supply chain to local suppliers in the U.S. During last month's Korea-U.S. summit, it was announced that investment in the U.S. would increase from $21 billion (approximately 29.2 trillion won) to $26 billion (approximately 36.2 trillion won), part of which would be aimed at enhancing U.S. finished vehicle production capacity and improving the localization rate of parts.