SOUTH KOREA REPORT
Korea’s Hyundai Motor Group is going on the offensive with hybrid vehicles. Its subsidiary Kia plans to introduce HV models in nine of its main models, doubling its current sales volume to 800,000 units by 2028. Kia will temporarily review its investment focus on EVs, where competition is heating up globally, to flexibly respond to market trends.
In early April, Kia’s CEO showed signs of impatience at a business strategy meeting in Seoul, admitting that the EV market is slowing down and pushing back the goal of surpassing sales of 1 million EV units by 2026 to 2027.
At the same time, he announced the expansion of HVs: by 2028, he will introduce HVs in nine major models worldwide, increasing HV sales from 372,000 units (12% of the total) in 2024 to 800,000 units (19%).
Kia’s new vehicle sales in 2023 will be 3.01 million units. Of these, less than 20% will be in Korea. The company aims to expand sales of HVs in the U.S. and European markets in addition to the domestic market.
Kia’s production structure will also respond to the shift in sales strategy. Kia will engage in “mixed production” by manufacturing EVs, HVs and engine vehicles at its 13 plants in Japan and overseas, allowing it to flexibly change the production ratio.
Kia will also increase its R&D spending, investing 38 trillion won over the next five years to 2028, an increase of 5 trillion won (approximately 560 billion yen) from the existing five-year plan (2023-2027). Development of new engines for HVs is underway to improve energy-saving functions and increase maximum driving range.
According to the Korea Automobile Mobility Industry Association, new vehicle sales in Korea will fall to 116,000 EVs in 2023, down 6% from the previous year. HVs, on the other hand, will increase by 55% to 280,000 units. Rising interest rates and a lack of charging facilities have slowed EV consumption, and HVs are gaining popularity due to their affordability and high fuel efficiency.
Source: The Nikkei
PSR Analysis: Until now, Korean automakers, led by the Hyundai Group, have increased their market share by focusing exclusively on BEVs, but they are now undergoing a major shift in strategy to respond to changes in the market. Until now, Europe and other countries have taken the lead in trying to exclude hybrids from the market. On the other hand, the market has gradually recognized the weaknesses of BEVs, and the advantages of hybrids are being reassessed. In particular, demand for BEVs has slowed, as evidenced by reports of an oversupply of EVs in China. In terms of responding flexibly to such market changes, Kia’s shift in strategy this time is highly commendable.
Japanese automakers, led by Toyota, are technologically ahead of Korean automakers in hybrid technology, and a large investment will be necessary for Korean automakers to catch up. Since the gap is not so small that they can catch up immediately, prompt action based on this policy shift will be required for Korean brands to maintain and expand their presence in the global market. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
