Korean cars are picking up the steps, where are the future opportunities?

Korean cars are picking up the steps, where are the future opportunities?

(This article was first published in Zijin Business Review, authorized to be published by Zijin Finance, please indicate the source when reprinting)

That year, the Hallyu wave swept across the country, people talked about "Blue Life and Death Love", liked "Full House of Romance", chased "You from the Stars", and a "Modern Family" made people relish the virtuousness of Korean women. Korean products have also swept China with film and television dramas.

That year, the competitive structure of China's auto market was also very traditional. In the joint venture car brand, there has always been a "chain of contempt" of German, American, Japanese and Korean, of which the Korean system is at the end, but the cost-effective strategy is invincible. In the weak years of geely, Great Wall, Chang'an and other independent brands, among the competitors of the same level, Korean brand passenger cars were often priced 30,000 to 50,000 yuan lower than those of German and American.

This really hits the pain point of consumers, Korean cars, really beautiful for several years. In 2016, when sales peaked, beijing hyundai's hot models were almost all compact products, with monthly sales of 30,000 vehicles. However, now the changes have gone down in the sea, and in the country, Hyundai Kia has frequently encountered Waterloo and even fallen into operational difficulties. The market share of Korean cars in the Chinese market has gradually declined, and there is little room for brand power and product strength to improve.

With the exploration of independent brands and the reduction of the price of joint venture brands, the market space on which Korean cars depend for their livelihoods has been directly squeezed. The once cost-effective advantage has become a label that cannot be shaken off overnight. Twenty years after entering China, Korean cars seem to have ushered in the darkest hour.

The Waterloo of Korean cars

Kia is the first automobile brand to enter the mainstream new car circulation field in China!

In the early 1990s, When China was experiencing a boom in "state-owned enterprise restructuring", yueda group, like many "hipsters", acquired a car factory in Yancheng that had lost money for many years. At first, in order to reverse the loss, Yueda introduced the production technology of a car called "Pratt" owned by Kia Motors of South Korea, and has since become acquainted with Kia.

Since then, Kia Motors has flourished in China, and models such as Maxima, Cerato, K5, K9 and other models have stirred up the market, which has had a profound impact on the Chinese car market. After reaching the top, Dongfeng Yueda Kia, which relies on the advantage of "cost performance", has taken a road all the way down. From a peak of 650,000 units in 2016, it fell to 159,000 units in 2021, and sales fell to the "heel".

Hyundai cars have gone out of a similar trajectory. Since 2015, Hyundai Motor Group's global sales have been in a state of continuous decline. As of 2021, Hyundai motor has not achieved its annual sales target for seven consecutive years. In 2021, Beijing Hyundai's annual wholesale sales plummeted to 385,000 units, only one-third of the annual sales of 1.14 million units in 2016. This is already the "five consecutive declines" in Beijing Hyundai's annual sales.

This is very different from the performance of the international market. According to the data, Hyundai Kia Group will sell 6.87 million units worldwide in 2021, ranking fourth among global car companies, and if compared from a global perspective, its comprehensive strength is still stronger than domestic independent brands. According to the latest data of the China Automobile Association, in 2021, the market share of passenger cars of Korean brands will drop to 2.4%, which can increasingly be classified into the category of "other".

In contrast, the market share of independent brands rose to 44.4% from 38.4% in the same period last year. Geely, the "self-owned brand brother", will sell 1.32 million vehicles in 2021, and great wall will sell 1.28 million vehicles in the same year. The sales volume of Korean cars that fell was almost equal to the volume of Geely and the Great Wall.

In addition, the retention rate of Korean brands is also declining. The three-year retention rate of Kia brand used cars has dropped from 72% of the peak to about 66%, and some used car dealers have bluntly said that they dare not operate kia brands because of the high discount of new cars and the low efficiency of circulation. "There are fewer and fewer approved owners, and it may be inventory that comes in." It's a 'Matthew effect' that only gets worse and worse. ”

There are reasons for the rise and fall of the Korean system

For a long time in the past, China's automobile industry was relatively underdeveloped, the overall level of technology was low, and the purchasing power of consumers was not very strong. At this time, the more mature Korean automobiles in China mainly focused on low-cost product strategies, seizing a lot of market space.

To some extent, Korean cars have made remarkable achievements in the Chinese market, the large reason is that they have seized the opportunity to seize the market dividend, and when the market dividend disappears, the development opportunities of Korean cars will be relatively reduced. The competition in China's auto market is becoming more and more intense, which also brings great challenges to Korean car companies.

The second reason for the decline of Korean cars is that at that time, the product strength of independent brand cars has not yet risen, and there is still a big gap with Korean cars.

After years of development, the technical strength of China's own brands has been continuously improved, and well-known domestic car companies such as Geely and BYD have made great progress, showing full vitality and self-confidence from product sales to supply chain construction. Its overall level is enough to compete with Korean cars, and the cost-effective advantage of Korean cars is no longer prominent.

The third reason is that in China, the electrification of automobiles and the new energy are the general direction. Tesla in China's attack on the city, the new car-making forces are full of vitality, the traditional car companies BYD, Great Wall Motors, etc. have accumulated deep technology in new energy vehicles, and the product strength can compete with foreign car companies at the same level.

In this field, Korean cars are moving very slowly in China, and it is not found that consumers' tastes have changed, and there are differences between their layout in other international markets.

Domestic Korean cars survive, but overseas Korean cars are a different scene. Recently, the results of the 2022 European Car of the Year were released in Geneva. Unlike in the past, this time the final list has only one fuel car selected, and the Korean car Kia EV6 won the title of European Car of the Year for the first time.

In 2021, Hyundai Motor Group announced a radical change in its strategy for the Chinese market. According to its plan, Hyundai Motor Group will launch pure electric customized models for the Chinese market, introduce high-end brand Jenisses, optimize the dealer distribution system and start online sales. This shows that Korean cars have found problems and begun to make adjustments.

Of course, if the Korean car can be adjusted earlier, it will be more active than now. The market performance of the ice and fire double day, The Korean car should be put into the Chinese market next, to find out what the real problem is?

In China, can Korean cars still usher in new opportunities, and the follow-up is still worth observing.

Resources:

"The Last Struggle of Korean Cars" Source: All-Weather Technology

"Hyundai, Kia lost, what is wrong with Korean cars? Source: "Finance World" Weekly

"Korean cars, defeat China" Source: Lei Feng Network