China sees heating battle between Korean and Japanese brands image

Hyundai could be one of the biggest losers from surging sales of Japanese cars in China as the South Korean automaker’s problems spread to the world’s largest auto market. Toyota’s sales surge shows Japanese brands are escaping the type of consumer backlash they faced last year over a group of uninhabited islands.

Hyundai’s total overseas vehicle sales fell 1 % in November from a year earlier, the company said on Monday, marking their first year-on-year drop since the 2009 financial crisis and sending Hyundai shares tumbling.

Japanese carmakers meanwhile are going from strength to strength thanks to the launch of new models, the weaker yen in the United States and an end to anti-Japan protests that played havoc with China sales last year.

Toyotaand its two local joint-venture partners saw China sales jump 41 % in November from a year earlier, while Honda posted a 102 % jump in China sales in the same period. Honda’s gain follows a 211.6 % year-on-year rise in October and a 118 % surge in September.

“Japanese carmakers, which boosted U.S. profits with the weaker yen, have more room to invest in China sales where they lag behind rivals,” said Song Sun-jae, an auto analyst at Hana Daetoo Securities. “For Hyundai, the China effect disappeared in November while the U.S. sales remain sluggish.”

Hyundai’s new plant in Beijing, which went into production last year, has helped to offset stagnating demand in the United States. Even so, China sales rose only 1 % in November from a year earlier.

The plant, Hyundai’s third in China, has capacity to produce 300,000 vehicles and the company plans to increase this to 450,000 next year.

Hyundai is considering building a fourth plant in China to maintain its market share of around 10 percent in 2015-2016, when the Chinese market is expected to grow to 20 million vehicles a year.

Via Reuters