+++ BYD , a Chinese electric vehicle manufacturer, is securing its sales network in South Korea by signing showroom lease contracts. The company plans to open 20 outlets across the country this year and expand to 70 by 2026. A Chinese company that acquired BYD’s sales rights in South Korea recently signed a lease agreement for a showroom in Gangseo-gu, Seoul. This location is currently a Jeep showroom. Han Sung Motor, which holds BYD’s sales rights for Gangnam and Gangdong in Seoul, will also open a BYD showroom at the Dosan-daero intersection in Gangnam-gu. BYD’s strategy involves opening 20 showrooms this year in the metropolitan area, Busan and Daegu. This approach contrasts with other electric vehicle companies like Tesla and Polestar, which have primarily targeted the South Korean market through online sales. An industry insider noted, “BYD believes that due to South Korean consumer preferences, a showroom-based sales strategy is more suitable. Even Tesla and Polestar have showrooms to provide consumer experiences”. In Japan, where BYD entered the market earlier than in South Korea, the company has secured numerous showrooms by utilizing local dealers. In South Korea, BYD will collaborate with five companies including the Chinese company that recently acquired BYD’s sales rights: Han Sung Motor will manage showrooms and service centers in Gangnam and Gangdong, Seoul; Deutsch Motors will cover Bundang (Seongnam) and Suwon in Gyeonggi Province; Seyoung Mobility will be responsible for Gangbuk in Seoul and Uijeongbu in Gyeonggi Province; and Samchully Motors will oversee Mok-dong (Yangcheon) in Seoul and Incheon. These companies are highly regarded for their extensive experience in operating imported car showrooms and service centers, as well as their financial strength. BYD’s electric vehicles are currently undergoing certification in South Korea, with models such as the Seal, Dolphin and Atto 3 expected to be sold. The certification process began in the first half of this year, with sales targeted for the latter half. The entry of Chinese electric vehicles, known for their competitive pricing, into the South Korean market is expected to directly challenge Hyundai and Kia. However, BYD has avoided a low-price strategy in Europe, Japan, and other markets, making its domestic pricing strategy a key consideration. +++
+++ As the US government intensifies efforts to regulate Chinese technology in CONNECTED VEHICLES over national security concerns, South Korea and other key allies are coordinating to balance these security goals with potential supply chain disruptions. The US State Department convened a meeting with representatives from allied governments and industry leaders, including officials from South Korea, Australia, Canada, the European Union, Germany, India, Japan, Spain and the United Kingdom. The goal was to find ways to safeguard critical infrastructure without stifling innovation. Connected vehicles are part of a broader network that includes personal devices and telecommunications networks. This makes them crucial nodes in critical infrastructure, and their security is paramount. Connected cars can communicate with traffic signals, other vehicles and even home automation systems. While this can lead to smoother commutes and enhanced safety, it also creates potential entry points for cyberattacks. The backdrop to this meeting is an ongoing investigation by the US Commerce Department into the supply chain of information and communications technology and services for connected vehicles. Launched by president Joe Biden on February 29, this probe focuses on the risks associated with using technology from countries deemed a security concern, such as China. The primary concern is that integrating Chinese technology into these vehicles could lead to hacking or data breaches, compromising both individual safety and national security. Although China was not explicitly mentioned in the State Department’s press release, the meeting is widely viewed as an effort to secure cooperation from allies and major automakers as the US considers regulating Chinese technology in connected vehicles. Industry analysts suggest that the US might eventually restrict the import of connected vehicles utilizing Chinese technology or parts. This poses a challenge for Korea’s automotive industry, which relies on certain Chinese components for its vehicles. Korean government and industry officials have requested a grace period for any specific measures considering their impact on supply chain disruptions. While US regulations primarily target complete vehicles, there is concern that Chinese-made components in Korean cars could be affected if deemed crucial to data collection and transmission processes. The broad definition of “connected vehicles” (encompassing any vehicle with navigation or wireless software or services that communicates with external systems) means numerous China-sourced components used in Korean vehicles, such as telematics control units and wireless communication modules, might fall under new US regulations. No specific measures are said to have been discussed during the meeting. A tentative draft of the bill is likely to be unveiled in September, according to news reports. +++
+++ SK Group and SK On are reportedly fast-tracking their collaboration with China’s Zhejiang GEELY Holding Group, a leading multinational automotive conglomerate. Industry sources reported that executives from Geely Auto responsible for technology, research and development, and international cooperation, visited SK Building headquarters in Seoul. The delegation, which included the CEO of Zeekr, Geely Auto’s premium EV brand, met SK Group executive vice chairman Chey Jae-won and SK On CEO Lee Seok-hee. This meeting follows the EV battery and vehicle electronics business cooperation agreement signed by SK Group and Geely Group on June 11 last month. Since then, both companies have been in on-site discussions on their joint initiatives. On July 20, Geely executives visited SK On’s battery plant in Seosan, South Chungcheong Province, to discuss battery supply deals for Geely car brands. Industry insiders suggest the attendance of executive vice chairman Chey Jae-won during the Monday meeting, who has been a key figure in fostering the SK-Geely partnership, indicates a major upcoming deal. A potential large-scale battery supply agreement could provide a much-needed boost to SK On’s operations. In November last year, SK On signed a deal to supply battery modules for the Polestar 5, a premium EV from Geely Group’s Polestar brand, set to begin production in 2025. An SK On representative declined to confirm details, saying, “We cannot confirm anything related to OEMs”. +++
+++ HYUNDAI , which previously declared itself a frontrunner in electric vehicles, has revised its electrification strategy to include both hybrid and electric powertrains. This change comes in response to the slow global transition to electric vehicles and increasing uncertainties in the U.S., its largest market. Hyundai now plans to produce hybrid vehicles at its new dedicated EV plant in the U.S. According to sources in the automotive industry, Hyundai has recently prioritized expanding its hybrid vehicle line-up as the foremost task in its electrification strategy. This marks a slight shift from last year’s mid-to-long-term plan, which heavily emphasized electric vehicles. Lee Seung-jo, senior vice president, CFO, and head of planning and finance at Hyundai, mentioned on July 26 during the announcement of the company’s second-quarter earnings that they are considering significantly increasing hybrid vehicle production using Hyundai’s flexible manufacturing capabilities. Hyundai had initially planned to produce only electric vehicles at its Hyundai Motor Group Metaplant America (HMGMA) in Georgia. However, the company has now decided to include hybrid vehicles in its production plan. HMGMA, with a capacity to produce 300.000 EVs annually, will invest in additional facilities to manufacture hybrid vehicles. A Hyundai representative stated, “We plan to invest in HMGMA to enable the production of hybrid vehicles, equipping our entire lineup from mid- to large-sized to small hybrids with hybrid systems”. Hyundai’s strategic adjustment is driven by declining EV demand and increased market uncertainties, particularly in the U.S., where former president Donald Trump’s potential re-election has intensified these uncertainties. Lee stated: “If Trump is re-elected, we are concerned that the business environment will become more challenging due to his pledged policies to abolish EV subsidies and increase tariffs”. +++
+++ The HYUNDAI MOTOR GROUP is set to maintain its position as the third-largest global seller in the first half of this year. If this trend continues, the group, which first achieved third place in 2022, is expected to solidify its position for the third consecutive year. As of July 28, data from various companies indicate that Hyundai Motor Group’s global sales for the first half of this year are 3.62 million units. This surpasses the Renault–Nissan–Mitsubishi alliance, which sold 3.37 million units and dropped to 4th place since the first half of 2022. Toyota is expected to retain its first-place position with over 5 million units sold, pending its early August report. Volkswagen, which ranked second last year, is projected to remain in the same spot with 4.35 million units sold. Thus, Hyundai Motor Group is firmly in third place for the third consecutive year as of the first half. The key to Hyundai Motor Group’s sustained third-place position is its overseas sales. While domestic sales (620.000 units) decreased by 9.8% compared to last year due to weakened consumer sentiment, overseas sales (3 million units) increased by 1%. The group performed particularly well in the United States, its largest overseas market. Hyundai achieved a record-high first-half sales figure of 431.344 units in the U.S., maintaining 4th position ahead of Stellantis, one of the American Big Three. Kia sold 386.460 units in the U.S. during the same period. The group’s strategy to overcome the electric vehicle (EV) market stall involved increasing the availability of alternatives like hybrids. The Hyundai Motor Group focused on profitable hybrids and SUVs in the first half while planning to overcome the slow market with affordable EVs. In the latter half of this year, Hyundai will launch the Casper Electric overseas under the name Inster and Kia will introduce the EV3 and a facelifted version of the mid-sized EV6 in Europe. +++
+++ JAPAN ’s carmakers are putting the finishing touches on a combine-and-compete strategy for an automotive age defined by batteries and software, with three manufacturers joining forces to complement a separate Toyota-led coalition. Honda and Nissan agreed this week to build upon a preliminary deal first reached in March, offering more details of how they plan to work together and also adding Mitsubishi to the mix. While the companies haven’t yet discussed a capital alliance, forming one is a possibility, Honda chief executive officer Toshihiro Mibe said. The partnership will span joint work on software development, batteries and other electric-vehicle (EV) components, as well as EV charging and energy services, the 3 companies said. Their cozying up to one another follows Toyota acquiring stakes in Subaru, Suzuki and Mazda, and helping them navigate a fraught era for legacy car companies. Whereas Toyota has tied up with its domestic peers from a position of strength (it’s been the world’s bestselling automaker for 4 years running) Honda, Nissan and Mitsubishi each are much smaller players on the global stage. Their coming together is seen as a move by Japan’s government to fortify its auto industry in the wake of China having emerged as the world’s new No. 1 car exporter. “This is coordinated by the government to build a competitive automaking industry”, said James Hong, analyst at Macquarie Securities Korea, adding that most automakers in Japan are too small to be able to invest in EVs individually. “It feels like a politically driven alliance”. While the United States has had the Big Three (General Motors, Ford and Chrysler, now owned by Stellantis) and Germany similarly has a trio in Volkswagen Group, BMW and Mercedes-Benz, Japan has a much bigger crop of carmakers manufacturing vehicles across the globe. Combined, Honda, Nissan and Mitsubishi sold about 4 million vehicles globally in the first 6 months of the year, well shy of the 5.2 million that Toyota sold on its own. While the 3 brands touted the potential for generating synergies from working together, executives also acknowledged they’ll have to overcome contrasts with their compatriots. “Although we have different cultures, we share the same challenges”, Nissan chief executive officer Makoto Uchida said at a news conference with Mibe on Thursday. Nissan, Honda and Mitsubishi have been behind the curve in moving to what automakers increasingly refer to as software-defined vehicles, which run on code as much or more than cars of the past were powered by combustion engines. The government set a target last month for its companies to account for 30% of the software-defined vehicle market in 2030. In addition to working together in software fields including automated driving, connectivity and artificial intelligence, the automakers may share battery specifications and supply. Honda and Nissan also are looking at re-badging one another’s cars, with both combustion-engine and battery-powered vehicles under consideration. The two didn’t offer specifics on particular models or outline how they may complement one another by region. Honda has announced plans to invest ¥10 trillion ($6.7 billion) on electrification this decade, while Nissan brings to the table the knowhow of having introduced the first fully electric car of the modern age (the Leaf) in 2010. Mitsubishi excels in plug-in hybrid electric vehicles and has a strong position in Southeast Asia. China is also a key factor behind the Honda-Nissan-Mitsubishi Motors partnership. All of Japan’s automakers have been losing share in the world’s largest auto market, largely due to the rising popularity of EVs. In June, Honda and Nissan sales fell about 40% and 27%, respectively, in China following the shutdown of some of their local plants. Last week, Honda decided to cut production of gasoline cars there by 19%. Mitsubishi exited last year. “Honda and Nissan have been struggling in China, and they will have to make more EVs to be able to stay there”, said Tatsuo Yoshida, senior auto analyst at Bloomberg Intelligence. The alliance, therefore, “makes sense”. For Nissan, the deal with Honda signals further deemphasis of the company’s alliance with Renault. While the French manufacturer saved Nissan more than two decades ago with a cash injection and by bringing in former Chairman Carlos Ghosn, they’re now in the process of equalizing their cross-shareholdings and unwinding aspects of their decades-long cooperation. Mitsubishi joined the alliance in 2016, when Nissan made an investment in the smaller carmaker. Nissan currently owns about a third of the company. The Honda-Nissan partnership will be on a more equal footing than what Nissan experienced with Renault, according to Seiji Sugiura, analyst at Tokai Tokyo Intelligence Laboratory. “Nissan couldn’t resist whatever Renault said”, Sugiura said, adding that they will now be able to leverage each other’s strengths. “They weren’t really equal partners”, he said. Honda had been working with General Motors on electric powertrains and software, but called off its plans last year to develop small EVs. Nissan’s relationship with Renault, which was always tense, deteriorated further after Ghosn was arrested in 2018 on charges of overstating his compensation, which he’s denied. +++
+++ NISSAN has outlined a “sustainability plan” to become a greener and more inclusive company, promising to recycle batteries, empower its workers and create safer cars. Nissan won’t be trying to beat rivals in the effort but hopes to work with various partners, Joji Tagawa, chief sustainability officer, told reporters at the company’s Yokohama headquarters. Nissan is aiming to achieve carbon neutrality by 2050, which means net zero carbon emissions across all operations. The governments of Japan, the U.S. and Europe have all set the same goal, as have Japanese rival Toyota and General Motors of the U.S. Under the latest plan, Nissan says that by 2030 it will reduce per-vehicle manufacturing CO2 emissions by 52% and cut per-vehicle driving CO2 emissions for new models by 50% in Japan, the U.S., Europe and China. Tagawa said the Nissan Social Program 2030 is centered around 6 pillars: safety, quality, responsible sourcing, intellectual property, communities and empowering employees. The company is supporting education to nurture future engineers, especially in relatively new areas like artificial intelligence and information technology, he said. “We aim to become a people-centric company”, he said, reiterating the company’s commitment not to tolerate human rights violations in its operations and supply chain. The latest plan is an update of Nissan’s Ambition 2030, announced in 2021, which was centered around introducing more electric vehicles. Tagawa acknowledged huge investments were needed, which likely won’t pay off immediately but will translate into long-run returns. He gave no specifics on the amount of investment planned. Nissan says pay of managers will reflect their efforts in diversity and sustainability. Sustainability is crucial in enhancing brand power, Nissan officials said. Nissan also listed resource depletion and changing mobility needs as other concerns. Awareness over climate change is growing in Japan. Earlier this week, record temperatures of above 40 degrees Celsius (104 Fahrenheit) were reached in parts of the country. Automakers from Japan, who dominated global markets in fuel-engines for decades, are adjusting their strategies for what the industry sees as an inevitable transition to more ecological powertrains such as electric vehicles and fuel cells. Experts say the world must reduce CO2 emissions to avert extreme weather conditions and serious damage to human health, ecosystems and social infrastructure from climate change. Reaching net-zero emissions by 2050 will require drastic emissions reductions. Last week, Nissan lowered its full-year profit forecast to 300 billion yen ($1.9 billion) from an earlier projection of 380 billion yen ($2.5 billion), as its first quarter profits suffered despite steady sales because of incentives and marketing expenses. It expects to sell 3.65 million vehicles globally in the fiscal year ending in March 2025, up from about 3.4 million vehicles worldwide for the last fiscal year. +++
+++ American cars are losing their appeal in the SOUTH KOREA market. Despite efforts such as new car launches to reverse this trend, U.S. automakers have been unable to keep up with market demand. Sales of imported U.S. vehicles (Jeep, Lincoln, Ford, Cadillac, Chevrolet, GMC) stood at 5.851 units in June; down 29.8% from 8.334 units in the same period a year earlier, the lowest figure in 5 years. This figure excludes the sales of Tesla’s electric vehicles. Industry experts point out that U.S. carmakers have failed to adapt to market changes. Their product line-up is still centered around internal combustion engines and lacks hybrid vehicles that have gained popularity in both the domestic and imported car markets. Although they have been introducing plug-in hybrid vehicles (PHEVs), these models are pricier, costing over 100 million won. While Japan’s Lexus sold 6.324 hybrid vehicles in the first half of this year, the 6 U.S. brands sold only 142. They have also lagged behind Tesla in terms of EV sales. Frequent price hikes have also eroded consumer confidence. U.S. automakers have adjusted prices multiple times, citing rising costs due to the covid-19 pandemic and the shortage of automotive chips. These cost increases were passed on to consumers, even those who had already purchased cars and were waiting for delivery. “Price hikes were applied even to consumers waiting for delivery after the contract was signed”, said an industry insider. “Prices gradually rose by 30% to 40%, which made it difficult for American brands to compete with German luxury carmakers”. A gradual decline in sales further reduced the influence of American cars in the Korean market. Jeep has lost showrooms to Chinese electric car maker BYD, which is preparing to enter the market. Ford has reportedly been preparing to withdraw from the market since the beginning of the year. Ford Korea will hand over the domestic import and sales rights of Ford and Lincoln to Sunin Motors, according to people familiar with the matter. U.S. carmakers are launching new cars and reorganizing their operations in response to sluggish sales. In January, Jeep introduced an updated model of its flagship Wrangler, the 4xe version, and launched the electric Avenger in Korea. “We’re overhauling our network to make the organization run more efficiently”, said a Stellantis Korea official. Cadillac also introduced its first electric vehicle, the Lyriq, in May. +++
+++ TESLA is recalling more than 1.8 million vehicles because of a hood issue that could increase the risk of a crash. Billionaire Elon Musk’s Tesla is recalling some 2020/2021-2024 Model 3, Model S, Model X and Model Y vehicles because the hood latch assembly may fail to detect an unlatched hood after it has been opened. The unlatched hood can fully open when the vehicle is in motion, potentially obstructing the driver’s view and increasing the likelihood of a crash. The company is unaware of any crashes, injuries or deaths related to the issue. Tesla began investigating customer complaints about the issue on Model 3 and Model Y vehicles in China on March 25. By mid-April, the automaker had identified the condition impacting vehicles in China as a latch switch deformation. Tesla has continued to look at the issue and found that the rates of occurrence were higher in China than in Europe and North America, but the reason for that disparity is unknown. Tesla said that as of July 20 it has identified 3 warranty claims or field reports for U.S. vehicles that are related to or may be related to the hood issue. The National Highway Traffic Safety Administration said that Tesla has released a free software update to address the issue. Owner notification letters are expected to be mailed on September 22. Last month, Tesla recalled its futuristic new Cybertruck for the 4th time in the U.S. since it went on sale November 30 to fix problems with trim pieces that can come loose and front windshield wipers that can fail. +++
+++ TOYOTA said that its group sold 5.16 million vehicles worldwide in the first half of 2024, outselling German rival Volkswagen to retain the top spot in global sales for the fifth straight year. But its global sales in the January-June period, including those of its small-car manufacturing unit Daihatsu and truck-making subsidiary Hino, fell 4.7 percent from a year earlier due to production halts stemming from a series of quality scandals and sluggish sales in China. Volkswagen sold 4.35 million cars in the same period, down from 4.37 million a year earlier. Toyota group’s global production fell 9.8 percent to 5.07 million vehicles in the first 6 months, the automaker said. The group’s domestic sales slumped 32.0 percent to 823.595 vehicles as Daihatsu temporarily suspended production after it was found data in safety tests were rigged. The small-car specialist resumed operations at all of its domestic assembly plants in May after a halt at its factories in December. Toyota also halted some domestic production during the half-year period, admitting that it conducted vehicle tests in ways not specified by the government. A recent recall of the popular Prius hybrid car also pushed down the figure. Overseas sales rose 3.1 percent to 4.34 million vehicles, thanks to robust demand in North America and Europe, Toyota said. However, Toyota is struggling in China with sales logging a 10.8 percent drop (Lexus included). Price competition is intensifying, with local automakers growing their line-up of affordable electric vehicles. In the first half, Toyota and Lexus sold a combined 4.89 million vehicles in the world, with Daihatsu and Hino selling 210.910 and 59,273, respectively. +++