Sport utility vehicles (SUVs) manufactured in South Korea have earned more than half the market share in the small-size SUV segment in the US.
In the first quarter of this year, 50.7% of all small SUVs sold in America were made in Korea by Hyundai Motor Co., Kia Corp. and GM Korea Co.
GM Korea sold 66,643 units or 30.2% of the country's quarterly total of 220,540 units, whereas Hyundai Motor and Kia have together taken a 20.5% share with 45,180 units.
The Korean-made small SUVs are increasingly gaining popularity in the US, where residents as young as 16 can get their driver’s license, in their appeal as first cars for teenagers.
“Many parents in America are buying small SUVs as birthday or graduation gifts for their high school kids,” said an industry source.
Industry insiders say that while SUVs are popular in the country, mid- or large-sized ones that are more expensive are rarely driven by teenagers with little driving experience. Small-sized SUVs are a natural choice for these young drivers looking for price affordability as well as vehicle quality.
Others note that a diverse product lineup offered by the Korean manufacturers within the small SUV segment is another sales driver. For instance, Hyundai Motor’s Venue is a smaller option than its Kona, while GM Korea’s Chevrolet Trax is a smaller model than the company's Chevrolet Trailblazer.
Q1 SALES FIGURES & FULL-YEAR PROSPECTS
Graphics by Jerry Lee By brand, GM Korea’s Chevrolet Trailblazer was ranked as the second best-selling model in the first quarter in the US market with 25,024 units. Hyundai Motor’s Kona also made it to the top five, ranking fourth during the same period with 22,610 units.
While the demand for small SUVs made in Korea are still strong, the auto industry analysts are paying close attention to the supply side amid the global semiconductor chip shortage.
GM Korea already shut down its two plants in Bupyeong from Apr. 19 to Apr. 23. They resumed production on Apr. 26 but are operating at 50% capacity due to the shortage of microcontroller unit (MCU) chips used in automobiles.
The company’s Changwon plant, located in the southeast end of the Korean peninsula, will also be operating at half capacity from May.
Analysts estimate GM Korea’s accumulated volume reduction due to the chip shortage to be around 17,000 vehicles so far.
Hyundai Motor and Kia are also hit by the semiconductor situation. Hyundai has temporarily halted production in its Ulsan and Asan plants, while Kia has stopped working overtime.
Hyundai Motor CFO Seo Kang-hyun said during earnings call on Apr. 22: “We may have to adjust production volume in May as we did in April.”
Likewise, Kia CFO Joo Woo-jung commented: “The shortage situation is likely to enter the worst phase in May.”
Hyundai and Kia said that they will minimize production delay by developing substitute parts and secure as much semiconductor volume as possible.
