Hyundai Quietly Beats GM, Nissan and Stellantis

Kia’s parent company, Hyundai Motor Company HYMTF has managed to beat General Motors GM, Nissan Motor Co Ltd NSANY and Stellantis N.V. STLA in annual sales volume, and it is now behind Volkswagen AG VWAGY and Toyota Motor Corporation TM as the world’s third largest automaker.

The South Korean automaker came a long way since its inception

Founded more than half a century ago as a manufacturer of affordable vehicles for its home market, the automaker’s international expansion began in the 80s. After working for decades to recreate its image as an upstart, Hyundai’s upscale spinoff, Genesis, is now going head-to-head with world's most luxurious car brands, while the carmaker is competing with Ford Motor Co F for second place in US EV sales, behind Tesla Inc TSLA. 

EV strategy

With the Ioniq 6, Hyundai’s latest EV that is aimed at younger buyers, leading the charge, the automaker is embracing electrification. While Volkswagen has struggled to get its EV strategy on track and Toyota still weighing its bets on hybrids, the South Korean company pushed out models such as the Ioniq 5 and affiliate Kia’s EV6 just as demand started to outpace supply.

Fueled by its success and backed by 19.4 trillion in investments, Hyundai plans to introduce at least 17 battery-powered EVs by the end of the decade, in additon to 14 by Kia, which should help the automaker achieve its goal of selling 1.87 million EVs per year by 2030. According to the co-CEO, Jaehoon Chang, the company is on the right track to achieve this goal which would represent 11% of the US market, and 7% of the global market. 

Challenges remain

Bigger challenges come with a bigger scale. The automaker is trying to be flexible, while optimizing and protecting production as much as possible in spite of the chip shortage, higher raw material costs and allegations its Alabama suppliers hired underage workers.

US challenge

Last year, North America represented 21% of total sales, making it Hyundai’s biggest single market, while its home market accounted for only 17% of revenue.

The US Inflation Reduction Act requires that EVs be assembled in North America with batteries made from materials sourced from friendly trading partners in order to quality for tax credits. Hyundai has been working with the South Korean government to persuade the US Treasury Department to tweak the bill or loosen enforcement until guidelines are finalized.

While the legislation requires carmakers to assemble their EVs in North America to receive the subsidy, Hyundai doesn’t yet have any operational EV plants, although it aims to build a $5.5 billion EV and battery facility in Georgia. The South Korean carmaker has requested a degree of flexibility from the authorities so it has the time to realize its US facility.

Its global presence is rooted in its home manufacturing base

Its strong manufacturing base in South Korea holds the world’s biggest assembly plant with an annual production capacity of 1.4 million vehicles in addition its nine factories spread across the globe.

Thriving after the pandemic

The company’s steady growth was hampered by the pandemic but the entire auto industry was heavily hit in 2020. In 2021, Hyundai saw production and sales increase, closing the year with 6.6 million cars sold, while Volkswagen sold 8.9 million and Toyota 10.5 million vehicles. This year, revenue is on track to rise 21% to $108 billion, the highest growth rate among major carmakers, according to the average of analysts’ projections. 

Challenging luxury brands

The company is also challenging Mercedes-Benz Group AG MBGAF, Bayerische Motoren Werke Aktiengesellschaft (OTC: BMWYY) and even Tesla with its Genesis brand that has experienced fueling growth. Hyundai plans to make this luxury line fully electric by the end of the decade. Hyundai is also seeking to reposition itself as a more upmarket brand in China by sharpening its edge, according to Euisun Chung, co-CEO and executive chair.

Last month, car sales in what is the world’s biggest market dropped 4.2% due to reinstalled Covid-related lockdowns that kept buyers aways from showrooms.

South Korean auto giant came a long way since its ‘affordable roots' it established 55 years ago. It did not only succeed to become the world’s third-largest automaker this year but it is also going after Ford to take its place as second-largest EV brand in the US.