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| This rendered image shows Hyundai Motor's electric vehicles under its IONIQ brand. / Courtesy of Hyundai Motor |
By Baek Byung-yeul
Hyundai Motor and Kia Motors are expected to see an increase in car sales according to industry analysts, Monday, who claim that poor demand due to the impact from the COVID-19 pandemic this year will be soon mitigated. The two representative brands will also be able to enjoy an improved average selling price for their models as their strategy to concentrate on selling more expensive SUVs appears to be working they said.
While competition in eco-friendly cars such as electric vehicles (EVs) is expected to intensify next year, they added Hyundai Motor Group's new Electric-Global Modular Platform (E-GMP) for EVs will make the automotive group stand out.
This year, Hyundai and Kia saw sales plummet as the pandemic impacted global demand. In the third quarter, Hyundai sold 997,842 vehicles globally, a 9.6 percent drop compared with the same period in 2019. Its sister company Kia Motors sold 699,402 vehicles, a 0.4 percent decrease year-on-year.
Though the two companies witnessed increased sales domestically, COVID-19 crippled new car demand in other markets.
However, the analysts said they will be able to enjoy rising sales both here and abroad in 2021 due to a high base effect. According to the Hyundai Research Institute, the number of vehicular exports will increase 7.7 percent in 2021, year-on-year, and the domestic car market will grow by between 1.9 percent and 4.3 percent.
Kim Pyeong-mo, an analyst at DB Securities, said Hyundai and Kia will show improved performances next year on the back of rising average selling prices (ASP) of their models.
"For the past 10 years, Hyundai and Kia's ASP on the global market remained at around 20 million won, but things began changing from 2019 after the two car makers' strategy to beef up their SUV lineups started to bring benefits," the analyst said.
"The trend is faster now as Hyundai's ASP has increased to 25.4 million won as of the third quarter. Kia's ASP has also improved to 24.82 million won. This is because the two brands have sold an increased volume of high-priced SUVs and more consumers started to choose premier models trims that have better options such as high-tech equipment." Kim added.
Given Hyundai and Kia's new SUV models such as the Tucson and the Sorento have shown better fuel efficiency than their Japanese competitors, the increase in ASPs will continue in 2021, which will help improve their corporate value, he further noted.
In the EV segment, Hyundai and Kia are expected to play leading roles with new models based on the E-GMP.
To woo more consumers to their EVs, Hyundai Motor Group has developed the new platform, designed to only manufacture EVs capable of using larger batteries that deliver up to twice the voltage of most current EVs.
Hyundai and Kia have already established growing positions in the EV market. According to data by SNE Research, Hyundai Motor Group sold 130,000 EVs in 77 countries from January to September to rank fourth behind Tesla, Volkswagen and the Renault Nissan Mitsubishi group. Its market share was 7.2 percent, up 1.5 percentage points compared with the same period in 2019.
