Foreign-owned car brands fall further behind on lack of EV commitment

Asia's Tech News Daily

Foreign-owned car brands fall further behind on lack of EV commitment

GM International President Steve Kiefer said none of the company’s 10 new electric vehicle (EV) models to be launched by 2025 will be manufactured in Korea, during his visit here in early November. Korea Times file

GM Korea, SsangYong, Renault Samsung lack diversity in EV lineups

By Yi Whan-woo

The Korean units of three foreign carmakers ― GM, SsangYong Motor and Renault Samsung ― are falling behind in the race to transition to electric vehicles (EV), after staggering in the combustion-engine competition.

Their poor performance is in contrast to the country’s two largest carmakers ― Hyundai Motor and Kia ― that accounted for 92 percent of the 2021 EV market here in the third quarter.

The polarized market trend is attributed to a lack of commitment to the EV market among the foreign brands.

Such a trend is fueling concerns that the gap may widen as Hyundai Motor Group, which owns Hyundai Motor and Kia, has been orchestrating carefully developed strategies under a vision to become the world’s third-largest player in the EV market by 2025.

“The three foreign brands have been considered second-tier players in the domestic market, and they may lose further ground considering they do not have a vision for EV, or hydrogen-powered cars, or other next growth engines,” an industry source said.

Foreign-owned car brands fall further behind on lack of EV commitment

SsangYong Motor, a debt-ridden carmaker, does not have any electric vehicle (EV) models. Korea Times file

GM Korea, SsangYong Motor and Renault Samsung sold a combined 141,237 cars between January and October in the domestic market, down 35 percent from the same period last year, according to the data by the Korean Automobile Manufacturers Association (KAMA).

By companies, Renault Samsung suffered the deepest sales drop of 40 percent year-on-year to 47,805.

SsangYong Motor’s sales retreated 36.9 percent to 47,805, and GM Korea’s dipped 26.8 percent to 49,156.

In particular, the trio suffered the worst sales slump since 1998 in the first half, with sales plunging 35.4 percent year-on-year to 88,625.

In 1998, the three sold only 73,169 vehicles in the wake of the Asian financial crisis.

The situation also remains unfavorable in the sales of electric vehicles (EVs).

From January to September, GM Korea sold 1,016 EVs and Renault Samsung sold 966 ― SsangYong Motor sold none because it does not have any EV models.

During the same period, Hyundai sold 17,209 and Kia sold 10,711, which altogether accounted for 92 percent of domestic EV sales.

The two leading carmakers’ combined performance helped Korea’s EV sales surge by more than 90 percent year-on-year, and accordingly, had the country ranked seventh in the international EV market.

The market share of EVs in Korea was 5.5 percent, which is lower than China with 9.4 percent but higher than the United States with 2.3 percent.

Foreign-owned car brands fall further behind on lack of EV commitment

Renault Samsung has two electric vehicle (EVs): Zoe, an all-electric variant of the SM3 sedan, and two-seater Twizy, with sales below 1,000 from January to October. Korea Times file

An industry source pointed to the lack of diversity in EV lineups, when asked why the foreign brands are losing in the competition.

Hyundai’s EV models vary by size and type, as seen in its mid-sized crossover utility vehicle (CUV) IONIQ5, Porter II EV truck, Kona electric SUV and Electrified G80, the first EV version from the luxury brand Genesis.

The EVs featured by Kia are the Bongo EV truck, Niro EV CUV and Soul EV subcompact CUV.

On the other hand, GM Korea only has the Bolt, the first electric version of a Chevrolet SUV or EV hatchback.

To make things worse, the recalls of LG Energy Solution batteries supplied to GM is suspending sales of Bolt here.

Renault has two models: Zoe, an all-electric variant of the SM3 sedan, and the two-seater Twizy.

“EV transition is not an option but something carmakers will have to follow inevitably in accordance with carbon neutrality goals,” a source said. “In this regard, diversifying choices for consumers is crucial but the foreign brands are not succeeding in implementing such a strategy.”

Lee Hang-goo, a senior research with the Korea Institute for Industrial Economics and Trade, speculated that foreign-owned companies here may “not only lose competence but also face a threat to survival” if they are excluded by their respective headquarters from EV manufacturing.

The possibility is in the air for GM Korea, with GM International President Steve Kiefer announcing the launch of new EV models in Korea by 2025, but none of them will be manufactured domestically.

“The 10 EVs will all be imported vehicles,” Kiefer said during his visit to Korea in early November, adding, “We are not announcing any plan to produce EV models in the country.”

The GM decision is believed to be a measure to avoid labor unrest risks, especially following a full-scale strike in 2019 that severely disrupted production and even prompted the U.S. company to consider pulling its business out of Korea.

Even so, the import strategy introduced by Kiefer is not promising, either, according to market observers.

They noted GM will have to compete against EV pioneer Tesla as well as Mercedes-Benz, BMW and other luxury import brands that are pushing to go all-electric.

As for Renault Samsung, it announced its partnership with Lynk & Co., an automotive brand formed as a joint venture between Geely and Volvo, in August to develop an eco-friendly vehicle for the Korean market.

Geely, the Chinese owner of Sweden’s Volvo, has formed a separate partnership with the France-headquartered Renault to sell hybrid vehicles in Asia.

But it remains to be seen whether the cars will be produced here.

SsangYong Motor, undergoing court receivership after its India-headquartered parent company Mahindra failed to attract an investor, saw a Korean consortium led by electric carmaker Edison Motors recommended as the preferred bidder for its acquisition.

Edison Motors is determined to turn SsangYong Motor around in three to five years and transform it into an electric vehicle-focused carmaker.

However, whether debt-ridden SsangYong Motor can successfully transform will depend on how Edison funds the billions of won required to end its court receivership and normalize the company.

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