Hyundai Motor and Kia are facing a double whammy in Europe, their No. 3 market where they sell 1 million units a year. Chinese automakers are raising their market share with value-for-money electric vehicles and plug-in hybrids (PHEVs), and the European Union (EU) has recently raised trade barriers to protect its own industry.
According to European market research firm Dataforce on the 30th, Chinese automakers sold 112,992 vehicles in Europe last month, a 114% surge from a year earlier. Their market share hit a record high of 9.8%.
MG under SAIC Motor sold 30,066 units last month, up 38% from a year earlier, ranking No. 1 among Chinese brands. BYD jumped 124% to 28,186, and Chery Automobile Co. surged 344% to 25,656. Elsewhere, Leapmotor climbed 423% to 8,782, and Geely Automobile Holdings increased 106% to 8,321, showing broad-based growth among Chinese companies.
Last month, sales of China-made PHEVs in particular soared 256% on-year to 34,503. That neared the level of China-made electric vehicles over the same period (38,281). Since early last year, as the EU imposed a 27% high tariff on China-made electric vehicles, Chinese automakers have been aggressively pushing PHEVs, which are excluded from the measure.
BYD launched the new PHEV model Seal U PHEV in Europe last year. The model is popular enough to compete for the No. 1 spot in sales with Volkswagen's midsize sport utility vehicle (SUV) Tiguan PHEV. The Seal U PHEV is priced at 39,990 euros in Germany, 10,000 euros cheaper than the Tiguan.
In addition, BYD has been selling the small SUV Atto 2 PHEV since this year, and Chery Automobile Co. is targeting the European market with its mainstay PHEV model, the Jaecoo 7.
While Chinese brands are growing rapidly in Europe, Hyundai Motor is seeing PHEV sales decline. Hyundai Motor sells the Tucson and Santa Fe PHEVs in Europe. Kia sells the Sportage, Sorento and Niro PHEVs but does not disclose sales by powertrain.
Last month, Tucson PHEV sales fell 21.8% to 1,477 from 1,890 a year earlier, while Santa Fe PHEV inched up 0.4% to 452 from 450 a year earlier. Year to date, Tucson PHEV is at 5,720, up 5.6%, but Santa Fe PHEV stands at 1,913, down 13.5%.
Hyundai Motor and Kia adopted range-extended electric vehicles (EREVs) instead of PHEVs as a bridge to full electrics. An EREV uses a battery as the primary power source and has an internal combustion engine, but it is used only to charge the battery. A PHEV, by contrast, uses the engine as the main power source.
Hyundai Motor plans to roll out EREV models by the end of this year, starting with the Genesis GV70 and Santa Fe, but there are concerns in the domestic auto industry that Chinese and European automakers will preempt the eco-friendly car market excluding EVs by pushing PHEVs.
Many expect the Industrial Acceleration Act (IAA) being pursued by the EU to be a headwind for Hyundai Motor and Kia. The IAA, whose draft was released in March, requires that more than 70% of EV parts, excluding batteries, be sourced from Europe. A significant volume of EVs produced at Hyundai Motor's Ulsan plant is sold in Europe, and if the law takes effect, exports will inevitably become more difficult.
According to the European Automobile Manufacturers' Association, Hyundai Motor and Kia sold 1,042,509 vehicles in Europe last year. Of those, 454,347, or 43.6%, were produced in Korea and exported.
Hyundai Motor Group plans to respond to the IAA by increasing the share of local production. It is considering ramping up local manufacturing using its plants in the Czech Republic, Slovakia and Turkey, and sourcing parts locally.
An official at a complete-vehicle maker said, "Compared with rivals in Europe, Japan and the United States, Hyundai Motor and Kia clearly show leading competitiveness in EVs, but Chinese companies are advancing faster," adding, "If they fail to implement effective countermeasures quickly, annual sales in Europe could fall below 1 million units going forward."