Hyundai Beats Rivals in U.S., China; Profit Soars

Posted by: Moon Ihlwan on October 22, 2009

No other market showed higher growth in auto sales than China this year and no other major automaker outperformed Hyundai Motor there. That more or less explains the South Korean carmaker’s amazing financial results at a time its rivals struggle to navigate through the industry’s worst downturn in memory. Hyundai said Oct. 22 its net profit in the three months ended September hit a new quarterly record of $832 million, up from the previous record of $690 million three months earlier and more than triple $225 million a year ago.

In China, Hyundai sold 412,000 vehicles in the first nine months of this year, up 88% from the same 2008 period. The rise, more than double the pace of a 43% gain in China’s overall car sales during the period, increased Hyundai’s market share in the country to 7.2% from 5.5% last year. Hyundai now sells more cars than Toyota, Honda and Nissan in China.

Hyundai also scored big in the other crucial market in the world: the U.S. In the first nine months, its U.S. sales rose 1.3% to 342,000, while Toyota’s sales fell 28% in line with the overall market. In the month of August, when carmakers were benefiting from the government’s cash-for-clunkers program, Hyundai’s sales surged 47% to a record 60,467 vehicles. In the global market, Hyundai’s share jumped to 5.5% in the third quarter of this year, up from 4.4% a year earlier.

Hyundai, like many other Korean exporters, enjoys advantages from a weak Korean currency. The won, which hit an 11-year low in March, has since gained by more than 30% of its value against the dollar but it is still about 20% weaker than it was at the end of 2007. The won is expected to strengthen further over the next year but Hyundai execs express confidence that their company could keep growing in 2010 with a new lineup of cars, including the newly designed Tucson crossover and Sonata family sedan. If things pan out as Hyundai envisages, its group sales, including those of Kia brand, could soon zoom past Renault-Nissan’s. That will make Hyundai one of the industry’s top five major players.

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Reader Comments

Jerome R

October 22, 2009 09:07 AM

Hyundai has taken a no excuses approach and its works. When they make a mistake, they do something different. When it got tough selling cars in the US, they just pushed a little harder. They came out with a great line up a few years ago and look it them now. They are making that line up better. On paper, GM should have been able to do this better. But Hyundai just keeps going. This is a lesson for all businesses large and small. Just keep going, forget the news and all the negative reports. Find a better way to do what you do!

Leo

October 22, 2009 10:50 AM

We bought our first Hyundai, an XG-350, in 2003. I liked it so much that we bought a Sonata in 2007. Both cars are doing great; the XG-350 has more than 150k miles on it and still drives like a new car. The Sonata has over 50k with no repairs needed beyond normal maintenance. I was attracted to Hyundai at first by the 60k mile bumper-to-bumper warrantee, but now its quality has me sold. If the competitors want to get in on the action, they also have to stand behind their product with a similar bumper-to-bumper warrantee. You can't convince people that you produce a quality product if you don't stand behind it with your money.

jambo

October 22, 2009 11:33 AM

Hyundai moves fast, and moves smart. GM? Well, they are entrenched in the old way and simply can't get break from their old ways of doing business. While other car makers operate in the mode of here and tomorrow, GM/Chrysler operate as if they were still in the good ol' 50's. GM/Chrysler's lack of vision will put them out of buisness in less than 3 years.

Jake

October 22, 2009 11:56 AM

4 years ago I wouldn't have never look at a Hyundai, but now it seem that you can get more value for your money than any other auomaker.

wisedonkey

October 22, 2009 02:57 PM

That's great...Let's us all buy overseas then complain there are no jobs. Wait that what we do now. Ford, Honda, Toyoda all make very good vehicles and products while employing Americans which means less social burdens,such as state welfare, heath care and the taxes, homes, schools get paid. I Don't need to be an economist to know that every product built with cheep economic slaves, cuts our own throats.

Asela

October 22, 2009 04:00 PM

While I am a Honda & Acura driver I take my hat off to Hyundai. The fact they put in a good warranty while Honda and Toyota have been cutting their warranty very secretly leads me to Hyundai. They are also making fast decisions while Honda and Toyota are becoming more like GM as they mature with ugly designs, rigid and slow decison making processes because the old people at these companies do not want to take risks. Bravo Hyundai!

Darren

October 22, 2009 04:34 PM

Hey Jambo, GM's new approach is this: get out of the rental business so you don't flood the market and drop your resale values (sounds a lot like Honda and Toyota), don't over stock your dealerships and then have to put huge rebates to clear them out (gee, sounds again like Honda and Toyota), and build vehicles with class leading value and quality like the Malibu, Equinox, Camaro, Silverado, plus the new Cruze and LaCrosse (gee again it sounds...you get the point). GM is using other's successful ideas to turn the ship around. In 3 yrs, GM will be alright. Remember, it's harder to stay at the top than it is to get there. Hyundai has shown great market share growth around the world, but they are also getting more and more into the rental business for volume sales. Gee, wonder where that will lead???

ATL Guy

October 22, 2009 07:44 PM

I recently bought a brand new Kia Sorrento. It is arguably the worst car that I've ever purchased. I've had to take this car back to the dealer 4 times for faulty sensors since I've bought it. At this point, I think this car is a lemon and I regret having purchased it. Stay with something more reliable than this tin cans. You'd only regret it.

marc

October 22, 2009 08:40 PM

GM does not have the best quality. I understand quality is subjective,but GM does not have the best engineering nor does it use the best materials. Look at it interiors. Look at the paint finish. Compare it with the Japanese or even Ford. GM does not stand a chance in the future.Half of GM's customers are patriotic Americans who are in all probability former Union workers or Blue collars workers. GM cheated their loyalty. It was and is selling push rod engines, lousy transmissions. Very cheap looking plastic interiors. Another test..test drive a Chevy Malibu with 100k miles and drive a Toyata Camry with a 100k miles. You will realise the difference. Forget driving a new car. All new cars drive well. The real test is when the car gets older and you want it to last a year more or two years more. I should know. I have sold hundreds of GM, Ford, Chrysler and German cars.
GM's management is not smart enough to make any of the remaining products to be world beaters.

mos effed

October 23, 2009 01:13 AM

Jambo, GM has been dead for the last 25 years. It just hasn't stopped squirming yet. Chrysler and GM both are relics from the past, symbols of an America that no longer exist. Good riddance. All must now bow down to new corporate flags from other nations.

And don't blame the American people for shipping our jobs to other countries because they buy "foreign" products. Corporations hold no sense of obligation or loyalty to America, unless it suits them. They slash jobs without remorse and gladly go overseas to find cheap labor for the sake of profits.

I'm glad GM is tanking. They've behaved like oblivious jerks, peddling god-awful cars for so long now they deserve exactly what's coming to them. There never should have been a bailout for them, or any of the banks for that matter. Sweep it under the rug and try not to think about it.

Brandon

October 23, 2009 09:07 AM

Hyundai's manufacturing for my car was done in Montgomery Alabama, I believe it's only the engine that's produced in South Korea. I'd rather pay smart foreign management and cheap US labor for a well done car than over pay flailing US managers that are sending the jobs to a Mexican plant. In the end, if we can't produce a quality car for a good price, then we don't deserve our own business.

Joe

October 26, 2009 11:57 AM

wisedonkey, you made mentioned other automakers such as Ford, Honda, and Toyota make quality cars while employing US labors.

I'd bet you didn't know about half of Hyundai US sales are from vehicles made in the US. That's right, the Hyundai Sonata and Santa Fe are both made in the states.

Kia has also started building vehicles in the US, with its recent opening of a plant in West Point, Georgia.

jpegger

October 26, 2009 05:21 PM

@wisedonkey - Hyundai/Kia make most of their vehicles here and pay US workers more than Toyota or Honda. Look it up. They also just built a brand new KIA factory right here in the USA as well and are hiring or have already hired thousands of US workers. Most US cars now are made in Mexico (and the really cheap ones in So. Korea), just a handful are made here.

@ ATL Guy - Yes, The Sorrento is crap (sorry), but that does not mean KIA is. See, the Sorrento is not a "NEW" better made KIA. KIA was purchased from hyundai several years back and has been under Hyundai management since then. The Sorrento was developed when KIA was a separate (crappy) car company and is the last of the old KIA to be sold through KIA. You should go take a look at the Borrego :)

Jason Arron

October 27, 2009 03:42 AM

I read every ones comments. I Own both a hyundia and a kia. both my Hyundia Sonta and Kia Optima came off the assimbully line in Alabama which employees about the same amount of workers as Subaru in Indiana employees. Yet my Hyundia and Kia get better mpg, cost 25% to 45% less and have not let me down... I have an 2002 Elantra from Hyundia and it has over 170k on it from me driving and taht car has only needed brakes and a tuneup at most. So before bashing or talking bad about a company Give them a try... besides how import are Hyundia/Kia sense all of mine came from Alabama.

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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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