Hyundai to bring new SUV to US

SEOUL • Hyundai Motor Co is banking on a new compact SUV to reinforce its line-up and help arrest a slide in sales in its biggest markets, after misjudging the consumer shift away from sedans that forced the South Korean automaker to increase incentives for consumers.

The compact model, called the Kona after a seaside town in Hawaii, will be introduced in the US and Europe in the second-half (2H) after a home debut last month. The vehicle will join the full-sized Santa Fe and mid-sized Tucson in Hyundai’s portfolio.

Even with the addition, the Seoul-based automaker is predicting a tough end to the year as the pace of American buying slows and Chinese deliveries continue to suffer a backlash over South Korea’s planned deployment of a US missile shield. South Korea’s biggest carmaker yesterday reported its smallest quarterly net income since at least 2010 after ageing models and a sedan-heavy lineup prompted South Korea’s biggest carmaker to boost discounts and a boycott in China dented sales.

“The competition in the US market is likely to intensify on falling sedan demand and slowing SUV sales growth,” Hyundai’s CFO Choi Byung-chul said in call after reporting earnings. “Hyundai will focus on stabilising the level of incentives and inventories by strengthening the competitiveness of models to improve profitability.”

In the US, sales between April and June declined faster than the industry, slumping by 11.5% to 177,568 units, according to the company website.

Incentives per car rose 42% to US$3,259 (RM13,964) in June. Those levels are among the highest offered by the company since at least the global financial crisis in 2008-09, according to Kim Jin-woo, analyst at Korea Investment & Securities, who recommends investors should buy the company stock.

Hyundai’s operating profit in the April-toJune quarter dropped 24%, falling short of analyst estimates. That pushed down the shares, which ended the day with a 1.4% gain to 148,000 won (RM566.44).

Sales in other markets aren’t faring well either. The company’s woes in China are compounded by perception that it’s sandwiched between foreign and local brands — not quite premium enough, yet more expensive than most Chinese offerings.

In a bid to regain market share and consumers’ trust in China, where second-quarter sales dropped 64%, Hyundai hired former Volkswagen AG executive Simon Loasby to lead its China design team. The automaker also plans to start production at its fifth plant in China in late August.

Overall, 1H sales dropped 8.2% to 2.2 million vehicles, making it tougher for Hyundai to achieve its goal of delivering a record 5.08 million vehicles for the full year. A sales recovery in Russia and Brazil is likely to continue, said VP Koo Zayong.

New models including the Kona, high-performance i30N hatchback and Genesis luxury G70 sedan will also help in improving Hyundai sales in the 2H of this year, the company has said. — Bloomberg