Hyundai Motor, which has been thrown into emergency mode by the imposition of a 25% tariff on cars exported to the United States, is also struggling in the domestic market. The slowdown is seen as the result of its key volume models aging and more consumers turning to imported cars.
◇ Hyundai Motor, volume models and Genesis models aging
According to the finished-car industry on the 16th, Hyundai Motor's cumulative domestic sales from January through August were 469,457 units. That is up 2.1% from the same period last year, but sales of key volume models and high-margin luxury cars fell sharply.
The Santa Fe, a midsize sport utility vehicle (SUV), one of Hyundai Motor's main sellers, saw its cumulative sales this year drop 21.5% year over year to 39,807 units. Sales of the Sonata and Grandeur, the volume models among sedans, also fell 4.1% and 5.8%, respectively, over the same period.
The luxury brand Genesis is also suffering weak sales. For the GV80, a midsize SUV, cumulative sales this year fell 26.1%, and the G80, a midsize sedan, also saw sales decline 10.2%. Due to the slump of the core models that had driven sales, overall sales of the Genesis brand fell 11.4% from the same period last year.
The slump in sales of Hyundai Motor's major models is analyzed as being due to the long time since their launches, which has led consumers to turn away. The first-generation GV80 debuted in Jan. 2020 and has only undergone a single facelift in 2023. The G80, now in its third generation, has been more than five years since its full-change model came out. For the Sonata, Grandeur, and Santa Fe, several years have passed since new model launches, and with opinions divided over the design of the models currently on sale, many analysts say this is contributing to poor sales.
◇ Imported cars stretch as new models and hybrids gain popularity
The imported car industry, whose growth had stagnated through last year, has clearly rebounded this year. According to the Korea Automobile Importers & Distributors Association (KAIDA), cumulative imported car sales through August this year were 192,514 units, up 13.3% year over year.
The company leading the rebound in Korea's imported car market is Tesla, the U.S. electric vehicle maker. Tesla's sales have been rising rapidly since it launched the new Model Y "Juniper," a midsize SUV, in May. Tesla's cumulative sales in the domestic market this year reached 34,543 units, up 55.1% from the same period last year.
Sales also improved for Germany's three carmakers and Toyota's luxury brand Lexus. BMW and Mercedes-Benz saw their cumulative sales this year rise 8.1% and 4.3%, respectively. Audi, which had long been in a slump after the 2015 "Dieselgate," posted a 34.3% surge in sales this year. Lexus rose 14.9% year over year, surpassing 10,000 units in domestic sales through August.
Industry watchers say recent aggressive discounts and marketing by major imported brands are paying off. In the case of Lexus, many analyses say the sharp rise in demand for hybrid cars has helped boost sales.
◇ U.S. tariffs 12.5% on Japanese cars, 25% on Korean cars… emergency to defend earnings
The U.S. Donald Trump administration announced that as of 12:01 a.m. on the 16th (local time) it would lower tariffs on Japanese-made automobiles to 12.5%. Previously, a basic tariff of 2.5% plus a 25% import car tariff were applied for a total tariff of 27.5%, but from that day it was lowered to 15% by adding the 2.5% basic tariff.
By contrast, the tariff on Korean-made automobiles has remained at 25% since April. Korea and the United States had earlier agreed to lower the tariff applied to Korean cars to 15%, but tariff adjustments have been delayed because the sides have not narrowed differences over the method of a $350 billion (about 484 trillion won) investment in the U.S. and the distribution of profits.
An industry official said, "For now, despite the high tariff, Hyundai Motor is not lowering prices in the U.S., but over time it will inevitably lose ground to Japanese cars and the slump in earnings will deepen," adding, "We have to brace for a lean season until next year, when new models such as the new GV80 are launched."