April 18, 2024

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[THE INVESTOR] Competition among local automakers in the local SUV market is expected to heighten this summer, as sport utility vehicles have become cash cows for automakers amid declining sales worldwide, industry experts said on June 6.

Hyundai Motor and Kia Motors, South Korea’s top two automotive companies, will continue the SUV battle with SsangYong Motor, the local unit of India’s Mahindra & Mahindra, in the small-size and full-size SUV sectors, seeking to secure the No. 1 spot.

The first round of the battle between Kia Motors and Ssangyong Motor was triggered by the release of Ssangyong’s premium large-size SUV, the G4 Rexton, in April.

At the launch event, Ssangyong Motor said it would aim to lay claim over the local full-size SUV market, previously headed by Kia Motors’ Mohavi SUV.

In terms of sales performance, the G4 Rexton has showed to be more preferred than Kia’s Mohavi here.

Ssangyong Motor sold 2,703 units here in May, while Kia’s Mohavi posted sales of 1,783 units, company data showed.

“We have to wait until the so-called ‘new car effect’ goes away to see whether the G4 Rexton has changed the landscape of the local large-size SUV market, previously dominated by the Mohavi. As for now, the model is off to a good start,” said Kim Pil-soo, a professor of automotive engineering at Daelim University.

Kim added that the price competitiveness of the G4 Rexton was a major sales booster.

The model is offered in four trims, priced between 33.5 million won ($30,000) and 45.1 million won, the company said.

The sticker price of the G4 Rexton’s basic trim is up to 7.6 million won cheaper than its rival 2018 Mohavi SUV.

The proportion of SUVs in the local auto market has rapidly risen to 24.7 percent in 2016 from 16.7 percent in 2012, according to data compiled by the Korea Automobile Manufacturers Association.

In 2017, SUVs are projected to make up 25.2 percent of the auto market.

Sales of SUVs have seen a boost amid slacking sales of local automakers.

Total sales posted by five major local auto companies -- Hyundai Motor, Kia Motors, GM Korea, Renault Samsung Motors and Ssangyong Motor -- slid for a third consecutive month in May here, totaling 135,443 units, down 7.1 percent on-year, data from the companies showed.

The upcoming release of Hyundai Motor’s first-ever compact SUV, the Kona, next week is also expected to further ignite competition between Ssangyong Motor’s best-selling compact Tivoli SUV.

The number of small-size SUVs in Korea rose over tenfold from 12,000 units in 2013 to some 110,000 units last year, the KAMA said.

“Encouraged by Ssangyong Motor’s success with the Tivoli, Hyundai has invested in the small-size SUV market. Hyundai now has a full SUV lineup,” said Kim.

Ssangyong Motor’s flagship Tivoli compact SUV has retained the No. 1 spot as the top-selling SUV here, posting sales of a total 23,811 units between January and May this year, up 7 percent on-year, the company said.

Eyeing to take over the booming compact SUV market, Hyundai Motor Group Vice Chairman Chung Eui-sun is anticipated to introduce the Kona next week.

By Kim Bo-gyung/The Korea Herald (lisakim425@heraldcorp.com)