Hyundai Expands In China, Exits Japan

Bertel Schmitt
by Bertel Schmitt

South Korea’s Hyundai will spend some $800m to build a third Chinese plant, says the Nikkei [sub]. The plant will be located in Beijing along with its two existing facilities. It is targeted to come on-stream at the end of 2011, with an annual capacity of 300,000 units.

According to the Nikkei, Hyundai, together with Kia, is ranked No. 2 in the Chinese passenger car market, with a share of around 10 percent. Volkswagen is #1. The new facility should help Hyundai to close in on leader Volkswagen in the world’s largest car market.

Also as per the Nikkei, Hyundai will withdraw from the Japanese passenger vehicle market. Hyundai’s Nipponese sales are a disaster. From January-October Hyundai sold just 764 to the Japanese. Sayonara.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Charly Charly on Nov 29, 2009

    Hyundai is good in making cheap, big cars. There is a very small market for big, cheap cars in Japan.

  • No_slushbox No_slushbox on Nov 29, 2009

    The South Koreans and Chinese drive on the right (some would say correct) side of the road (steering wheel on the left side), and their entry level cars are b and c segment cars. For Hyundai the same is conveniently true of the US. The Japanese drive on the left side of the road (steering wheel on the right side), and their entry level cars, with more than 1/3 of the market, are microcar kei cars. It doesn't make a lot of sense for Hyundai to try to develop RHD kei cars for a dying market, when instead it can focus on LHD b segment + cars for South Korea, the US and China. Especially since the Japanese have intense, non-trivial, ethnic prejudices that further complicate Hyundai's success in Japan, especially with regard to purchases as conspicous to one's neighbors as a car. It's Japan's loss, the Genesis Coupe, with either the I4 turbo or V6, is better than anything that Japan makes at anywhere near the price.

  • No_slushbox No_slushbox on Nov 29, 2009

    Re: "It’s quite simple: Hyundai never had a concise value proposition for the Japanese buyer. I think NN had it best: 'Hyundais are only comparable to their Japanese competitors, not better.' Or cheaper. Or whatever." It's definitely NOT that simple. If Hyundai had nothing to offer buyers of Japanese cars then it would have never had any success in the US market, where the Japanese were already well established. The truth is that 1) Hyundai doesn't make the kei cars that 1/3 of Japanese buy, and making kei cars wouldn't be worth its time, but, more importantly 2) the Japanese are intensely xenophobic, and even if a Japanese person isn't intensely xenophobic he or she won't buy a foreign car (unlike a phone or tv) out of concern than his or her neighbors are. Intensely xenophobic culture beats tariffs any day, if anyone doubts that look at Japanese auto market penetration in Europe (where the locally produced cars are so bad that the French and Italians can’t even sell theirs in the US) vs. Japanese auto market penetration in the more open minded US.

  • Psarhjinian Psarhjinian on Nov 29, 2009
    Japan is an aging country with a shrinking population. Hardly a car market worth trying to break into.Japan is an aging country with a shrinking population. Hardly a car market worth trying to break into. Yes, but it's also a market with a policy-induced forced turnover rate and a population with a decent amount of disposable income and a willingness to buy the next new thing. If there's a word to describe the market, it's "hypercompetitive": so much so that their cast-offs have been sold effectively as new throughout APAC. Even in recession, it's a big market. Have a look at Toyota's product portfolio in Japan: including Daihatsu and Hino, it's to a level of depth, breadth and niche-exploiting madness that would make even the Germans blanche. They own the JDM in a way that not even GM owned North America, and they absolutely, positively Do. Not. Let. Up. Ever. It's hard enough for the other Japanese marques to hold ground, and only Suzuki, in a rare moment of Toyota's not being fast enough, has managed to grow. Hyundai didn't stand a chance, and not through any fault of their own. They'd have to find some kind of near-profitable niche they could establish themselves in, and no such animal exists in Japan, certainly not when the domestic players are fighting to keep their heads above water.