Hyundai Motor’s Chongqing plant is facing the issue of shortage of customers and SUV models that are cheaper and popular. Even after giving a discount of up to 25%, the dealership of the company was unable to sell more than hundred vehicles per month, while Nissan was selling more than 400 vehicles each month.
Last year, Hyundai developed a $1 billion massive manufacturing plant for increasing production up to 300,000 vehicles every year. However, the factory is only using 30% of its total capacity due to slowing down of the Chinese market and weaker sales.
The fifth largest automaker of the world, Hyundai, refused to make any comments on the decreasing sales, but said that it is cooperating with BAIC for turning around its business in China. Hyundai and its partner Kia’s sales were at rand 3rd last year in China, only after General Motors and Volkswagen. But this year its rank fell below to number nine and its China market share has also decreased.
Their foreign rivals have defended their premium segment turfs and have also kept the prices competitive for the mass-market models that pushed Hyundai’s position as an affordable foreign brand. In U.S. also, the market share of Hyundai fell to 4% nearing the decade low.
Hyundai is facing this issue mainly in U.S. and China as it was unable to cope up with the shift in consumer taste including increasing demand for SUVs and unreasonable prices. In order to address the problem, Hyundai is revamping designs, giving more autonomy to the regional units, bringing new SUVs and developing products according to the local taste of the consumers.
Hyundai saw a 68% plunge in its net profit of the third-quarter last month and its operating margin also shrank down to 2.7% during January to September.
Source: Reuters, Money Control
