Hyundai, Kia cautiously optimistic about global economy recovery

The Korean duo of Hyundai and Kia have acknowledged the impact of Covid-19 in their global second quarter (April-June) results even remaining upbeat on their electric mobility initiatives.

Specifically in the Indian context, Kia has outlined its projections for the Sonet compact SUV which will be launched in the coming weeks. The company intends to sell 100,000 units per year in the domestic market while targeting 50,000 vehicles annually for exports. According to Kia, the Sonet is targeted at a younger generation which is tech-savvy, aspirational and socially connected.

Kia, which is part of the Hyundai group, will be hoping that the Sonet replicates the success of its premium sibling, Seltos, which is the leader in the segment it operates in. Numbers for the Carnival MPV, which was launched more recently, have been little to write home about in comparison.

As for Hyundai, which is the second largest player in India and has been around much longer, it remains “cautiously optimistic about a gradual recovery” of global auto demand in the second half of 2020. The downside risks, continues the automaker, “include uncertainty and a significant slump” in the global economy brought on by a possible resurgence of Covid-19.

The more disturbing fact is Hyundai’s apprehension that the economic recovery of emerging markets “remains uncertain”. What this implies for India is not entirely clear even though it is more than evident that the pandemic has knocked the stuffing out of the economy since the lowdown was first imposed in late-March.

Personal mobility

Despite this, Hyundai remains bullish on the growing prospects of personal mobility with customers not too inclined to using public transport or ride- hailing apps like Uber and Ola. Likewise, used cars also present a tremendous business opportunity in India.

Both Hyundai and Kia will have little to worry, though, about their home market, Korea, which has handled the pandemic effectively with numbers at a far more manageable level compared to the US, Brazil and India.

As a result, Hyundai has reiterated that it will “enhance its product competitiveness” with strong new models in the Korean market where auto demand remains relatively steady. Total sales of Hyundai vehicles in markets other than Korea dropped by 47.1 per cent to 4.78 lakh units, while sales in Korea rose 12.7 per cent to 2.25 lakh units.

Kia has echoed these sentiments stating that strong consumer demand in Korea helped “mitigate the negative impacts” caused by the spread of Covid-19 in other regions, including the US, Europe, and India. This is borne out by the fact that Kia’s sales in Korea increased to 1.61 lakh units during Q2, up 26.8 percent while sales outside Korea fell 39.7 percent to 3.54 lakh units in the same period.

Strong investments

In the electrification space, Hyundai plans to continue its “strong investments” on a new dedicated battery electric vehicle with the E-GMP (electric-global modular platform) next year as well as honing its its skills in fuel-cell electric vehicle technology and urban air mobility.

As for Kia, it has indicated that despite the tough business environment it will continue to focus on realising its ‘Plan S’ mid to long-term strategy. This will see the Korean brand “proactively introduce” 11 battery electric vehicles.

It is just three years since Kia first made known that it was setting up a plant in Andhra Pradesh. Since then, the company has gone flat out readying the facility and a supporting supply chain ecosystem. Its debut offering, Seltos, took the market and the brand was quickly established.

Hyundai has been here since the late-1990s and signalled its intent as the first serious rival to Maruti Suzuki with a product blitzkrieg that began with the Santro and Accent followed by a host of other models leading to the more recent i-10, i-20, Verna, Creta, Venue and so on.

Both Hyundai and Kia have steered clear of making their bonding public at the front end even while there are obvious synergies happening in R&D, sourcing and so on. The duo’s biggest challenge continues to be market leader, Maruti Suzuki which has now joined hands with Toyota.

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