Sedans and Missiles: Hyundai Slams Into Another Sales Roadblock

The frustration never seems to end for Hyundai executives. After last year’s Korean labor strife and political scandal, the brand now faces flagging fortunes in the all-important North American market, all thanks to a car-heavy lineup that once guaranteed piles of profit.

Now, the automaker faces the same problem in another global growth engine — China. While that market has also discovered its love for crossovers and SUVs, there’s another problem that Hyundai can’t turn around by rushing a new vehicle to production. Hyundai, it seems, can’t do a damn thing about high-altitude defensive missiles.

Already battered by the Chinese crossover craze — which has seen competitors like General Motors clean up — Hyundai has become a victim of geopolitics.

Anti-Korean sentiment is nothing new to China, but the growing distrust and boycotting of South Korean products — a practice tacitly encouraged by the country’s Communist government — has hit a new high. In response to the nuclear ambitions of North Korea, a key Chinese ally, the South is literally on the defensive. Recently, news emerged that South Korea plans to deploy a U.S.-supplied Terminal High Altitude Area Defense (THAAD) missile battery.

With the first pieces of the missile shield now in place, the system should be fully operational by the end of the year. China isn’t pleased.

According to Bloomberg, Hyundai showrooms in the largest Chinese cities are ghost towns. A manager in a Shanghai dealership told the news agency that weekends will go by without a single person entering the showroom, and that half of his sales staff have already quit.

Reuters reports Hyundai and Kia sales fell a staggering 52 percent in March, year-over-year, as the boycott ramped up. Market share has shrunk to just 3.5 percent. As the automaker counts on China for about a quarter of its overseas sales, the THAAD battery keeping its Seoul headquarters safe from nuclear annihilation won’t save it from that incoming blow. Still, the company persists.

Hyundai plans to offer seven new China-only vehicles, including a gas-powered and electric SUV, to lure Chinese buyers into showrooms. Doing its part, Kia also has a China-only SUV the way.

Beijing Hyundai Motor Company executive Chang Won-shin holds out hopes that anti-Korean sentiment will blow over, telling Bloomberg he expects the business climate to “get better soon.” The company is expected to drop its first-quarter financial report later today, with Kia’s results coming tomorrow.