MADRID/SEOUL -- On highways connecting major cities in Spain as well as on the narrow, cobbled streets of old towns, Korean cars have become a common sight.

From the all-new i30 to Kona, Hyundai Motor’s latest vehicles are easily spotted on the streets of Europe, probably more frequently than in China and the US, the two major markets being targeted by the company. And most of them are new models.

Europe had previously taken a back seat in Hyundai’s export plans but this year’s data shows sales in the continent accelerated faster than in China or North America.

And Hyundai has been seeing record-high sales growth there despite the overall market in Europe slowing.

The momentum for growth could continue, considering that 90 percent of Hyundai and Kia vehicles being marketed in EU were launched in the past two years. They are targeting younger drivers in Europe, as a tactic to improve its brand value in a market that is home to carmakers with loyal customer bases and more than 100 years of history.

In the January-May period, the South Korean auto giant sold a total of 445,842 passenger vehicles in Europe under the Hyundai and Kia brands, marking it the fifth-largest carmaker in terms of combined market share, with 6.3 percent of the market, according to the European Automobile Manufacturers Association.

In terms of the percentage of new passenger car registrations, Hyundai Motor alone ranked second with 8.2 percent, after PSA Group, which recently acquired Opel and Vauxhall from GM, provisional data showed. Kia grew 4.8 percent in the same period this year, ranking sixth. 

Since entering Greece in 1977 with 300 units of the Pony, dubbed Korea’s first-ever car, Hyundai has gone through tough times in Europe, home to a number of auto giants, including Volkswagen, BMW and Renault.

It was more than 30 years before the carmaker was able to reach European sales of half a million units a year in 2008.

But less a decade on, Hyundai Motor Group is on course to sell more than 1 million units in Europe for the first time this year.

Moreover, Hyundai and Kia launched their first regional headquarters in Frankfurt, Germany, last month, to quickly respond to the fast-changing European market, the company said. Germany, home to Volkswagen, BMW and Mercedes-Benz, is the largest European market for Hyundai in the region after the UK and Spain.

Their designs appear to have attracted young customers in Europe, as well as the low defect rates, said Choi Dong-woo, executive vice president of Hyundai Motor Europe Headquarters.

“According to market survey, design was the first purchasing factor, and we see high scores on the design feature of strategic vehicles to Europe including Tucson, Kona and i30,” he told The Korea Herald.



Hyundai and Kia are known more as SUV makers than producers of compact cars. The Tucson was the best-selling Hyundai car in Europe with 47,244 units sold as of April this year. The company sold 154,056 units last year. A facelifted Tucson will likely hit the market in the second half of the year, according to reports.

The market image of Hyundai as a green carmaker in Europe is also expected to fuel its growth.

“Hyundai and Kia responded fast toward Europe’s anti-diesel movement by placing nondiesel, energy efficient vehicles such as Ioniq and Niro,” said Lee Jae-il, an auto analyst at Eugene Investment in Seoul.

Hyundai’s Europe chief also vowed to expand its green lineup, bringing Kona EVs and Nexo to the front, which he believes will improve the carmaker’s brand value in the future.

Hyundai became a global carmaker on the back of rapid market expansion in the US and China in a short period of time. For years, Europe had been considered “a closed market” for Hyundai, as it has loyal customers who take pride in local brands.

But the carmaker seems to have potential in the traditional market for the auto industry, at a time when it is suffering from waning sales in China and the US.

Of the four major markets for Hyundai Motor Group, Europe was the only region that saw growth in terms of sales per region, according to data from SK Securities. While sales in China took up 20.5 percent of total sales in 2011, the proportion dropped to 16.7 percent as of January to May this year. North America also saw the proportion of sales drop from 23.2 percent to 21.6 percent, and South Korea from 20.6 percent to 17.7 percent. The proportion for Europe, on the other hand, increased from 11.7 percent to 14.1 percent in the same period.

“Europe is a difficult market in terms of brand penetration, whereas the US has always been open to foreign brands. Hyundai focused a lot on China for years, considering its incomparable market size as well as its past sales growth (before the THAAD dispute),” Lee said.

“Europeans have low preferences toward foreign brands. But if they are to choose among foreign brands, Hyundai and Kia appear to be considered more attractive than Japanese carmakers, considering their specifications and prices,” he said, adding that there are benefits of bilateral free trade agreements.

The sales growth, however, has little to do with the profitability of Hyundai and Kia’s business in Europe, according to analysts.

“Hatchbacks and compact vehicles have been major products in Europe, but even with the growth of Hyundai’s i-series, it didn’t really have an effect on improving its profitability,” said Hwang Kyung-jae, an auto analyst at CGS CIMB in Seoul.

“The profitability of (Hyundai’s global business) rather depends on growth in emerging markets (like Brazil),” he said. 



Hyundai may have proven its strength in the compact vehicle segment, but will it succeed in climbing up further to the upper segment, and start building its image as a premium brand?

Market observers said that it may be premature to introduce the Genesis brand.

“In terms of brand profile, Hyundai will always be targeting the “low-mid” end; a very strong value proposition with luxury options at cheap prices,” said Sam Ha, equity sales manager at Kepler Cheuvreux in Paris.

“The decision to make Genesis a stand-alone brand is interesting but will take a lot of marketing firepower to bring the brand image to a higher level than Hyundai and Kia. Genesis would have been more successful if it was marketed as a pure-EV brand, similar to Tesla.”

Hyundai has no plans yet to launch its Genesis brand in Europe.

By Cho Chung-un, Korea Herald correspondent (christory@heraldcorp.com)