Things are looking pretty bleak for Korean automakers in America.
Not all attempts to enter the US auto market have proven to be futile, but if Hyundai can’t get its spiraling sales in order, it may stand to have all the hard work it’s put into wooing American buyers undone. According to Automotive News, the Korean automaker is coming out of a tough 2017 and has just announced that it expects 2018 to be just as difficult. Hyundai’s problem turning a profit can be attributed to multiple problems, only one of which it has some degree of control over.
That would be sales. For the third year in a row, Hyundai missed sales targets in the US and China, with business in the latter region suffering from strained tensions between South Korea and the People’s Republic of China. Even without political tensions, Hyundai is in line to have even more trouble in America. Hyundai CFO Choi Byung-chul's says that "U.S. sales conditions are expected to be challenging, as a result of persistent weakness in demand and rising competition.” Though the US is only Hyundai’s third largest market, the 11% drop in sales it experienced last year is indicative of a larger problem: the fact that it doesn’t have enough SUVs in its lineup to pique the interest of North Americans.
Not that it doesn’t have plans in place to change this. By 2020 Hyundai will debut seven SUVs, including a revamped Santa Fe that’ll be out later this year, all in hopes that the new options will pry Americans away from competitor dealerships. Unfortunately, sales aren’t the only problem plaguing Hyundai. It's also having trouble keeping high profit margins thanks to the rising value of the won. Korea’s currency has jumped 7% relative to the dollar in the fourth quarter of 2017, which chips away at Hyundai’s profit. It also puts Korea at a disadvantage compared to Japanese automakers when considering that the yen is currently weak. Unfortunately for gearheads, regaining profits means a slow march down a road paved in fuel-efficient SUVs for Korea.