Hyundai Motor, Kia report record-high H1 sales in US

Hyundai Motor Group’s auto units posted all-time high sales in the first half of 2021 in the US market.

According to the industry on July 2, Hyundai Motor Co. and Kia Corp. together sold a total of 804,944 vehicles in America during the first half. The figure marks a 48.1% growth from the sales made during the same period last year.

By company, Hyundai Motor sold 426,433 units, a 52.2% growth from the first half of last year, whereas Kia sold 378,511 units, a 43.7% growth.   

The industry sources highlighted that Hyundai Motor Group’s growth rate of 48.1% is almost 15 percentage points higher than the average of its industry peers in the American market at 33.7%. Hyundai Motor Group’s main rival Toyota’s growth in the given period was 44.5%, followed by Honda’s 40.7%, General Motors’ 19.7% and Stellantis’ 17.4%.

Forbes analyzed that Hyundai Motor Group could outperform its global peers in the US market largely due to its better management of the ongoing microchip shortage.

KEY NUMBERS & FIGURES 

By model, Hyundai Motor’s three best-selling vehicles in the US market in the first half was Tucson (83,517 units), Elantra (73,437 units) and Santa Fe (63,110 units).

Kia’s three top-selling models during the given period were Forte (62,159 units), Sportage (53,374 units) and K5 (51,120 units).

Auto industry analysts highlighted that Hyundai Motor Group’s profitability has also improved, as the higher popularity of its vehicles has reduced the amount of sales commissions given to the local car dealers. Typically, car dealers charge higher commission rates for vehicles that are harder to sell.

In June this year, Hyundai Motor gave out a sales commission of $1,722 per vehicle, down 31.4% from the same period last year, to local dealers. Kia’s per-unit commission during the same period was also down by 38.2% to $2,336.

In contrast, Hyundai Motor Group’s industry peers paid an average commission of $2,751 for every vehicle sold in the country.

The analysts also noted that the South Korean auto group was able to raise the retail prices of its cars. In the second quarter of this year, Hyundai Motor’s average retail price was $29,740 per unit, up 3.8% from the same period in 2020. Kia’s average retail price in the given period was $28,237, up 12.9% versus 2020.

SOME CONCERNS FOR H2

Despite record-breaking performances in the first half, industry watchers say that the outlook for the next six months is not as rosy as it should be.

First, the rate of sales growth is slowing down. Hyundai Motor’s June sales in the US market was down by 18.4% from May, whereas Kia’s sales during the same period was down by 14.7%.

The decline was largely caused by the crunch in supply, sources said. Hyundai Motor and Kia are failing to meet the US consumers’ demand for its vehicles due to auto chip shortage.

Hyundai Motor Group’s auto units had typically maintained their inventory of vehicles large enough to be supplied in the US market for 3 months, but the group is now only able to keep a month of volume only.

Financial analysts also highlighted that Hyundai Motor’s labor union is also planning for a strike this month in Korea. The union will hold a vote on July 7 to decide on whether to start a strike.

“While Hyundai Motor Group will likely post strong second-quarter results, it is inevitable to lower estimates for the third quarter due to the union strike issue,” said Samsung Securities analyst Lim Eun-young.

Write to Il-Gue Kim and Hyung-kyu Kim at black0419@hankyung.com
Daniel Cho edited this article.