No Quick Sales Relief for Hyundai in China

Hyundai Motor Co., whose revenue in China has plunged more than 50% this year, faces more of the same over the next 12 -24 months, predicts S&P Global Ratings.

The slump has been triggered by internal problems at its joint venture with Beijing-based BAIC Motor Corp. and the fallout of political tensions over South Korea’s deployment of a U.S.-supplied missile defense system, Bloomberg News reports.

S&P estimates that Hyundai and its Kia affiliate will sell a combined 1 million vehicles in China this year, at least 40% below last year’s total. The Hyundai-BAIC venture swung to a loss of 210 billion won ($186 million) in the first have of this year from a 700 billion-yen profit in the same period last year.

Part of Hyundai’s problem is the same one hurting sales elsewhere: a product lineup that lacks enough SUV/crossover models to meet demand. The Korean carmaker has responded by shuffling its top management in China.

But Bloomberg says the prospect of a continuing sales drought in China may prompt some Hyundai dealers to drop the brand in favor of better-selling domestic marques. One dealer tells the new service he is losing 10,00 yuan ($1,500) on every sale because of retail price cutting.