Source: Gasgoo
Hyundai Motor Group’s subsidiary brand Kia plans to double the sales of hybrid cars by 2028. Previously, Kia focused on the electric vehicle market, but due to intense competition, the company is reconsidering its strategy and introducing hybrid versions of its existing nine main models.
Recently, Kia’s CEO Song Hosung stated that the company would adjust its plans due to declining demand on electric vehicles.
Kia will increase the production of hybrid cars, aiming to sell 800,000 hybrid vehicles by 2028 and that account for 19% of its total sales. In 2024, Kia expects the sale of hybrid car can reach 372,000 units, representing 12% of its total sales. Kia has also postponed its goal of reaching 1 million by one year to 2027.
Image source: Hyundai
In 2023, Kia sold approximately 3 million new vehicles. Among these, less than 20% were sold in South Korea, while Europe and the United States accounted for 50%. In the realm of hybrid cars, Kia also plans to expand sales in Europe and the United States.
Kia introduced the hybrid version of its Carnival minivan in November of last year, which received praise for its performance and fuel efficiency. This move becomes a driving force behind the company’s hybrid vehicle sales.
Kia is adjusting its production which changes in market. Kia will use a mixed way of production, which will help the company produce electric, hybrid, and gasoline-powered vehicles in its 13 factories around the world and thus achieving flexibility in production ratios.
This way of production allows Kia to adjust the output of hybrid cars and increase the operating profit margin of this department.
Over the next five years before 2028, Kia plans to increase R&D spending to 38 trillion Korean won (approximately $276 billion), and its an increase of 5 trillion won compared to the existing five-year plan leading up to 2027. The company is also developing a new type of hybrid engine to improve efficiency and extend range.
Image source: Hyundai
In 2023, the total sale of Hyundai Motor Group reached 7.2 million units, and Kia accounting for 40%. Hyundai and Kia collaborate on procurement and development. The group develops its hybrid technology, such as vehicle batteries.
According to a report from the Korea Automobile Manufacturers Association, the sale of electric vehicles in the country decreased by 6% compared to last year, while the sale of hybrid car increased by 55% to 280,000 units.
Due to the rising of interest rates and lack of charging infrastructure, the growth rate has slowed down on electric vehicle. Making hybrid car becomes a popular alternative for automakers due to its cheap price and high fuel efficiency.
At the financial results press conference in January of this year, Hyundai Motor also announced plans to increase hybrid car production. Sales of electric vehicles have been sluggish recently. Hyundai selling approximately 49,000 electric cars in the first quarter of this year, which decreased 34% compared to the same period last year. Additionally, Hyundai seems to be preparing hybrid versions for luxury models slated for release after 2025, which was not part of the company’s previous plans.
Since 2010, South Korean automakers have been focusing resources on electric vehicles. Until June of last year, Kia had planned to increase its electric vehicle sales in Europe fivefold by 2030 compared to 2023. However, consumer demand for electric vehicles has slowed down since factors such as the early termination of subsidies,
Although South Korea’s charging network is expanding, Korean consumers are beginning to turn to hybrid cars due to inflation and subsidy reductions when purchasing cars.
Lee Jae-il, an analyst at Eugene Investment & Securities, stated, “Hyundai and Kia have been slow in expanding their lineup of hybrid cars, but they can still catch up with the growing market. Although the group lags behind in hybrid car engines and other technologies, they have no choice but to catch up through research and development to make up for the sluggish sales of electric vehicles.”
Troubled electric vehicle manufacturers are not limited to South Korean companies like Hyundai and Kia, as Chinese competitors are expanding market share through low-priced models. Tesla also announced on April 15th that it would be cutting over 10% of its workforce worldwide.
