The Hyundai Car Brands Wither

3159_1_2Market penetration and bad PR have taken down Hyundai and stablemate Kia, which until recently were the hottest brands in the U.S. market. As sales of competitors rise, the two manufactures will find it nearly impossible to keep pace. Their reigns as the darlings of the American car industry are over.

Hyundai sales rose only 2.3% to 96,024 in the first two months of this year, compared to an overall industry increase of 8.4%. Kia sales dropped 3.4% to 77,807 in the same period.

By contrast, sales of the industry leaders - General Motors Co. (NYSE: GM), Toyota Motor Corp. (NYSE: TM) and Ford Motor Co. (NYSE: F) - all rose in the double digits. Chrysler's sales were up 9.4% for the period.

One reason for the stagnation of Hyundai and Kia sales is likely the scandal over gas mileage claims. Car research firm Edmunds wrote in November:

  • Hyundai and Kia said they overstated the estimated fuel economy on about 900,000 2011-'13 vehicles, including the 2012 Hyundai Accent and 2012 Kia Soul.
  • The Korean companies will compensate owners for the inaccurate claims.
  • The EPA announced that its investigation into "inflated mileage claims" prompted the action by Hyundai and Kia.

Some models that the two companies sell face more competition from low- and mid-priced cars and light trucks. In the first two months of the year, Honda Motor Co. Ltd.'s (NYSE: HMC) Accord sales rose 51%. Ford Fusion sales rose 42%. Sales of the Ford Fusion and Toyota Corolla each rose 22%. All of these vehicles are in the top 20 in terms of U.S. sales. Hyundai has two cars in the group. Sales of one of those - the Sonata - dropped 8% for the period. Sales of its Elantra rose 15%. Hyundai is losing market share to several other companies in the battle among the most popular cars and light trucks.

The U.S. car market is the hottest large car market in the world. If global manufacturers want to take advantage of that, they need to make progress in 2013. Hyundai and Kia have not articulated much of a plan to regain their growth rates. That is because they have none.


Filed under: 24/7 Wall St. Wire, Autos Tagged: F, featured, GM, HMC, TM

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