South Korea’s top carmaker Hyundai Motor Co. and its smaller affiliate Kia Motors Corp. are likely to be hit hard by a recent explosion in a Chinese port city, industry watchers said Sunday, amid existing hardships from low sales in the world’s No. 1 auto market.
On Wednesday, a series of explosions at the Ruihai warehouse in China’s northeastern port city of Tianjin wiped out some 4,100 Hyundai units, including its high-end models that are not produced in South Korea.
Industry watchers say Hyundai is estimated to have incurred up to 160 billion won ($136.22 million) in losses from the blast, and that the accident is likely to have an adverse impact on the carmaker’s sales in China.
“Although the loss will be covered by insurance, the affected cars were luxury models and the number of damaged cars was so high that a setback in the automaker’s sales and delivery plan is unavoidable,” an industry source said.
Hyundai and Kia, the flagships of the world’s No. 5 auto giant Hyundai Motor Group, have already been suffering from low sales in major overseas markets.
According to industry sources, Hyundai and Kia saw their July sales in China plunge 32 percent and 33 percent on-year, respectively. In June, the duo’s combined market share in the region came to 7.3 percent, down from the 9.1 percent tallied in the previous month.
Hyundai and Kia’s poor performance in the neighboring country is due largely to the heightened competition there among both local and overseas carmakers, in addition to a decline in demand amid slowed growth in the world’s No. 2 economy.
However, with last week’s devaluation of the Chinese yuan, some say the South Korean auto firms, both of which have manufacturing facilities in China, may see their sales pick up.
“If the Chinese economy recovers on the back of its currency devaluation and thereby helps offset adverse business conditions, it may be possible for the two carmakers to turn their sales around in the second half of the year, when they roll out new models,” a market watcher said. (Yonhap)
