Hyundai, Kia poised to gain from Japanese automakers' setbacks
As Toyota and other Japanese automakers face weaker sales and earthquake-related production disruptions, Hyundai and Kia are positioned to win replacement demand in the U.S. and other key markets.
Hyundai Motor vehicles are parked in the outskirts of Ahmedabad, India, on Oct. 8, 2024.REUTERS/YONHAP
Korean automakers could absorb replacement demand in key overseas markets as Japanese rivals struggle with weakening sales and prolonged production disruptions due to a powerful earthquake, experts say.
Toyota Motor Corporation, the world's largest automaker by sales volume, is expected to report second quarter operating profit of $7.04 billion, down 5 percent from a year earlier, according to the brokerages’ consensus compiled by Reuters on Monday. If confirmed, it would mark the company's fifth consecutive quarter of on-year decline in operating profit.
Toyota's global sales have weakened across several key markets. The consensus shows that sales fell by around 30 percent in China and the Middle East and by about 16 percent in Oceania.
Rising supply chain costs linked to the Iran war have also weighed on profitability.
The company's challenges have been compounded by production disruptions following the recent earthquake in Kumamoto, Japan.
Toyota, Nissan Motor, Mitsubishi Motors and Daihatsu Motor suspended operations at some factories on Friday, according to Automotive News and Japanese media reports recently.
Even assembly plants that escaped direct earthquake damage have been affected because production problems at major suppliers — including Aisin Corporation and Renesas Electronics Corporation — have disrupted the broader manufacturing supply chain.
The disruptions are expected to affect production of several key export models for the U.S. market, including Toyota's 4Runner SUV, Nissan's Rogue crossover, Lexus NX and Infiniti QX80.
The Japanese automakers have yet to announce when production will resume. More than 10,000 vehicles are expected to be affected by the production disruption.
People observe vehicles made by Japanese automaker Toyota during Indonesia International Motor Show 2026 in Jakarta, Indonesia, on Feb.9.REUTERS/YONHAP
In the meantime, Hyundai Motor and Kia are expanding sales in the North American market, backed by strong demand for hybrid vehicles and SUVs.
The two Korean automakers sold a combined 616,491 vehicles worldwide in July, up 3 percent from the same month a year earlier. In the United States, their sales rose 5 percent to 165,284 vehicles. Especially, hybrid vehicle sales jumped by more than 50 percent and drove the overall increase.
Industry observers say the combination of weaker global salesfor Japanese vehicles, rising costs and supply chain disruptions could create an opportunity for Korean automakers to expand their market share.
"Hyundai Motor Group has strengthened its resilience by expanding local production in the United States and broadening its lineup of hybrid vehicles and SUVs," an industry source said. "If production disruptions at Japanese automakers drag on, Hyundai Motor and Kia are well positioned to capture replacement demand in the U.S. market."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
