Drew Angerer | Getty Images News | Getty Images
SAVANNAH, Ga. — Hyundai Motor Group is having its best years in the US
The South Korean automaker has successfully transitioned from budget vehicles and dancing hamsters to competing with formidable automakers in the highly profitable US market.
The Hyundai, Kia and Genesis brands are expected to capture nearly 11% of the U.S. new vehicle market this year — the highest level since the automaker entered the country in 1986. It should also be among the best-selling electric cars. year, only at the end Tesla through the third quarter.
But whether the world’s fourth-largest carmaker by sales last year can continue its winning streak, especially in electric cars, is questionable. In August, Hyundai buyers lost federal tax credits associated with purchasing an electric vehicle due to changes to the program within the program The Biden Administration’s Inflation Reduction Act.
Domestic automakers, including Hyundai’s closest competitors in electric cars — Tesla, Ford Motor and General Motors — you are still eligible for the loan. All of Hyundai’s electric vehicles are currently imported into the U.S., although it makes a few gas-powered models at plants in Alabama and Georgia.
CEO of Hyundai Motor Co. In an exclusive interview with CNBC, Jaehoon “Jay” Chang described the loss of incentives as a worrisome and “very challenging issue.” But he said he believes the automaker can continue its long-term growth in the U.S. despite the short-term hiccup.
“The IRA, in the short term, it gives us some restrictions on customer choice,” Chang told CNBC last month as the company celebrated the groundbreaking of a new $5.5 billion electric car and battery factory in Georgia. “Long term … we have a very solid plan. … I think we can be competitive.”
Hyundai, including Genesis, and Kia are owned by the same parent company, headquartered in Seoul, South Korea, but largely operate separately in the US.
Hyundai, Kia and other foreign automakers are vocal opponents of the new IRA electric vehicle tax credit regulations. The law, passed by Congress in August, immediately eliminated a tax credit of up to $7,500 for plug-in hybrid and electric vehicles that are imported from outside North America and sold in the US.
Hyundai works closely with public officials in the US and South Korea to change regulations or secure an exemption for automakers, Chang said. U.S. officials have confirmed that such discussions are underway, including a meeting last week between U.S. Trade Representative Katherine Tai and South Korean Trade Minister Ahn Dukgeun.
Hyundai says its investment in Georgia — the largest economic development project in the state’s history — should count toward something akin to an IRA overhaul.
Hyundai executives and government officials focus on the automaker’s new “Metaplant America” in Bryan County, Georgia, on Tuesday, Oct. 25, 2022.
CNBC | Michael Wayland
Management also takes note of the US and South Korea have a free event on site for vehicles. (Vehicles made in Mexico and Canada still qualify for credits.)
Jose Munoz, Hyundai Motor’s global president and chief operating officer, declined to disclose the specific financial impact of the credit loss, but described it as a huge blow to the car company’s bottom line.
Steven Center, chief operating officer of Kia America, said the IRA’s intentions are good for America, but “they’ve pulled the rug out from everybody.”
Executives said the new Georgia plant, which was announced months before the IRA was approved, is the culmination of Hyundai’s growth in the U.S., which they credited with advancing a systematic approach to improvement over decades and a decisive strategy to go all out. about its new products in recent years.
“We’re trying to do everything we can, but honestly, it’s always challenging to be an innovative type of disruptor. But I think we’re on the right track so far to be responsive to customer needs.” Chang said. “We like to be different.
Look no further than Hyundai’s new vehicles to prove it’s ‘different’. The automaker’s futuristic-looking Kia EV6 and Hyundai Ioniq 5 appear ready to take off into space.
Meanwhile, the Hyundai Palisade and Kia Telluride SUVs have been among the most in-demand cars in the country since their 2019 launches.
The Kia EV6 on display at the New York Auto Show on April 13, 2022.
Scott Mill | CNBC
Management noted that the launches of both the Telluride and Palisade, followed by the Kia EV6 and the Hyundai Ioniq 5, were major turning points in the company’s product plans.
“Telluride is attracting wealthier, younger, more educated customers, and those are all gains. That’s a real game changer,” Center said, calling SUVs and EVs Kia’s “golden cycles.” “We’re looking at more and we’re going to grow as fast as we can.”
The SUV and EV followed the automaker’s surprise and well-received entry into the luxury market with the Genesis brand in 2015..
Genesis performed well in influential rankings from Consumer Reports, JD Power and others. Last week at the Los Angeles Auto Show, Genesis gained notoriety with a new convertible concept, and its G90 sedan was named the 2023 Motor Trend Car of the Year.
Genesis X Convertible concept EV
“The design language was a big differentiator for us,” Chang said. “We leave the designer free.”
Even the company’s Kia Carnival minivan — a segment many have given up on — has earned praise for its SUV-like design and functionality.
The rise of Hyundai and Kia is impressive compared to other foreign automakers.
“When they came out, they had a reputation for being just cheap,” said Jake Fisher, senior director of auto testing at Consumer Reports. “Over the years it’s gone from cheap to valuable to really very competitive.”
Japan’s Toyota has spent decades building up sales in the US. It entered the U.S. auto industry with small cars in 1957 and had a 10.4% U.S. market share in 2002, according to public filings. It is now the world’s largest car manufacturer by sales in recent years.
Hyundai reached the 10% US market share mark last year, roughly 10 years faster than Toyota, according to LMC Automotive. The research and forecasting firm expects Hyundai’s US market share to peak at 10.7% before falling to 9.7% in 2025 as electric car production is expected to begin at a new factory in Georgia.
“I think what Hyundai and Kia and Genesis have done is they’ve really compressed that time frame. They’ve gone from very affordable cars to competitive vehicles to competitive luxury in a very relatively quick time frame,” Fisher said.
Sales of Hyundai and Kia vehicles have grown roughly 61% since 2010 to more than 1.4 million vehicles in the U.S. last year. Despite an expected decline in sales this year due to supply chain issues, the company is still expected to gain market share.
It’s a similar story for the sale of electric cars. LMC predicts that Hyundai’s all-electric vehicle sales will account for 9.2% of the US EV market this year. While sales are expected to rise, that percentage is considered the company’s peak until at least 2024 or 2025, when the new Georgia plant is slated to begin operating.
Hyundai’s output, which ranks it among the top five in the world, remains lower than that of Toyota and Volkswagen. Munoz said the new Georgia plant is expected to produce 300,000 vehicles a year with the potential to reach 500,000 in the future. The company’s two current US plants can produce up to 730,000 vehicles a year.
“In the U.S., our plan is to grow,” Randy Parker, CEO of Hyundai Motor America, told CNBC earlier this month. “It all depends on capacity, which will determine how much we can grow.”