Korean automakers outsold Honda in the US for the first time

Looking at just these mainstream brands, Hyundai and Kia outsold Honda by more than 130,000 vehicled, the first time the combined brands have outsold Honda. If their respective luxury brands are included — Hyundai’s Genesis and Honda’s Acura — the margin is much narrower, just 22,000 sales, but the Korean brands still come out slightly ahead. These sales figures were supplied by the automakers.
For Kia, it was the first time the brand ever sold more than 700,000 vehicles in one year. Hyundai set a record for retail sales — meaning excluding sales to fleet customers — and increased its market share by eight-tenths of a percentage point.
It might seem odd to compare two automakers with just one, but Hyundai and Kia are closely related. Hyundai Motor Group, Hyundai’s parent company, owns a controlling interest in Kia, and the two companies share a lot of engineering in their various models. In the United States, Kia and Hyundai operate as two distinct companies with different US headquarters and executives, different dealerships and even different factories — Kia builds cars in Georgia while Hyundai has a factory in Alabama. But, taking a global view, they are like two members of the same family.
Larger SUVs, like the Kia Telluride, have helped change perceptions of the Kia and Hyundai brands.
Both brands have come a long way from their former identities as purveyors of just basic transportation for the budget conscious. It hasn’t been quite a steady climb, though. The two brands’ combined market share came close to Honda’s a decade ago, according to data from the automotive website Edmunds.com, but the gap opened up again before the Korean brands surged over the past few years to finally pass Honda.
Hyundai and Kia each saw sales increase roughly 20% in 2021. Honda’s sales were up just 8.2%. In announcing its sales, Honda noted struggles with supply chain issues. Both Hyundai and Kia acknowledged that the industry-wide microchip shortage created challenges for them as well. Neither company said what was done to work around it.
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“Remember, with this chip shortage, the brand that has the more ample supply is the brand that’s going to win,” said Vanessa Ton, senior manager of analytics at Cox Automotive, a company that owns various automotive websites and auto dealer services firms.
Besides apparently handling its supply of computer chips better, according to Ton, Hyundai and Kia also benefited from some compelling products, particularly the three-row Hyundai Palisade and Kia Telluride SUVs which have proven extremely popular. Both models still command high prices from customers, said Ivan Drury, an industry analyst with Edmunds.com, and they bring in new customers to brands previously known for smaller SUVs and cars.
“I think those are the two products that are going to help them maintain that [market growth] because they were kind of chipping away,” he said, “but now, by adding this new mix of consumers, they’re really changing the mindset.”
Hyundai and Kia also compete in market segments that many other automakers have quit. Both brands offer sedans like the Kia K5 and the Hyundai Elantra, while some other automakers, such as Ford and GM, have stopped building sedans for the US market. Kia also has a new SUV-like minivan model, the Carnival, which replaced the Sedona minivan in the US. Kia’s minivan sales were up 90% last year.
Being two separate brands does provide Kia and Hyundai with some innate advantages over any single brand like Honda. Namely, car shoppers get more choices of models and dealerships. Someone shopping for a compact sedan can choose a Honda Civic, Kia Hyundai Elantra or Kia Forte. Same with compact SUVs. With each brand offering a choice in that segment, Hyundai and Kia have a total of two opportunities to win you over — the Hyundai Tucson and Kia Sportage — to Honda’s one, the popular Honda CR-V.
Another factor that may have helped Hyundai and Kia was the general sense of economic unease in the nation last year due to the coronavirus and related disruptions, said Ton. The Korean brands have tended to do well when people were worried about money, she said, pointing to the brands’ strong performance during the 2008 recession.
“They do really well because of their value proposition,” she said.
Both brands offer long warranties and, on a dollar-for-dollar basis, their cars tend to have lots of features and options for the money, she said. For buyers watching their pennies, a Hyundai or Kia feels like a frugal purchase. It also helps that the Korean brands hired designers and engineers from German brands like BMW and Audi to help make their models sharp-looking and enjoyable to drive, she said.
A lot of car shoppers still associate Hyundai and Kia with that more negative corollary to “good value.” They’re still seen by some as being “cheap,” said Drury.
“If they don’t know what the brand is putting out today in terms of product, their reaction is almost always negative,” he said. “And that’s perfect. They still have people to convert. They’ve got tons of room to grow.”
Randy Parker, vice president of sales for Hyundai Motor America, also credits the brand’s products for the sales growth, of course. But, besides that, he points to a huge promotional push.
“We never took our foot off the gas from a promotional perspective,” he said. “In fact, we spent more money” in 2021 than in 2020.
Besides straightforward advertising Hyundai also invested in a relationship with Disney and Marvel Studios that saw Hyundai vehicles appearing in ads with likes of Marvel’s Loki and Captain America and Wanda from WandaVision. Hyundai also entered into an arrangement with Amazon that now has all of Hyundai’s dealer inventory listed on Amazon.com.
“I’m not going to make any predictions about the future and what our volume looks like,” Parker said. “All I can tell you is that our mindset is that we’re looking to grow year after year and, and so far, we’ve been able to do that over the past several years.”

Source : Cnn