Hyundai, Kia combined South Korean market share hits record-low

November 4, 2016 6:21 AM EDT

An employee sits in front of the logo of Hyundai Motor at its dealership in Seoul, South Korea October 26, 2016. REUTERS/Kim Hong-Ji


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SEOUL (Reuters) - South Korea's Hyundai Motor Co <005380.KS> and sister Kia Motors Corp <000270.KS> saw their combined domestic market share plunge to its lowest ever last month, as quality issues and a labor strike hit their image in one of their most lucrative markets.

The pair held 58.9 percent of their home market, the lowest since 2000 when the Hyundai Motor Group was launched, the group said on Friday citing industry data.

The share was 67.7 percent last year and 73.6 five years earlier, falling as free-trade deals led to more German imports.

South Korea is Hyundai's third-biggest market by sales and is highly profitable due to strong sales of large and luxury cars.

But tepid reception for its newer saloon models came as the automaker was hit with its worst-ever factory strike and a U.S. recall, denting consumer perception of the local champion.

Hyundai last year recalled some of its Sonata models in the United States due to defects in their Theta 2 engines, raising questions of safety back home.

Last month, Hyundai and Kia extended the warranty period for five Theta 2-equipped models in South Korea, though they said engines produced at domestic factories were not defective.

Some of Hyundai's factories suffered strikes from July to September which, together with weakness in emerging markets, left the automaker reporting its lowest quarterly net profit in at least four years.

Hyundai also said it may miss its annual sales target for a second consecutive year.

"Hyundai Motor hasn't made any major changes to power trains or designs for newer models like the Sonata and Elantra, whereas rivals such as General Motors Co (NYSE: GM) have come up with more competitive and diverse models," said analyst Chae Hee-geun at Hyundai Securities.

"There is room for Hyundai's domestic market share to fall further as such issues will not disappear in the short term," Chae said, also citing "negative public perception" of the firm.

Hyundai Motor replaced the head of its South Korean sales last month. It plans to launch a new version of its Grandeur this month, the saloon's first makeover in five years.

(Reporting by Hyunjoo Jin; Editing by Christopher Cushing)



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