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Almost everyone had a bad time in 2020 except Hyundai and Kia, Honda is done with Russia, and Tesla. All that and more in The Morning Shift for December 30, 2020.
1st Gear: Hyundai? Hyundai!
It was not so long ago that Hyundai’s cars were basically a joke in America, poorly made, not so stylish, not very powerful, cheap, sure, but also sure you could do a little bit better. Needless to say, that has changed in the past couple of decades as Hyundais have remained cheap but also become well-made and even stylish.
Hyundai’s partner Kia has had a similar trajectory. All of that work is now reaping big rewards for Hyundai Motor Group, the parent of both.
From The Wall Street Journal:
The South Korean auto-manufacturing giant, which sells vehicles under two separate companies—Hyundai Motor Co. and affiliate Kia Motors Corp.—expanded its U.S. market share more than any other major auto maker through November and held retail sales steady during the period, defying the broader industry’s 12% drop, according to market research firm J.D. Power.
As investors have lavished attention on electric-vehicle startups, shares of Hyundai and Kia, listed separately on the Korea Exchange, also rallied in 2020, climbing 67% and 49%, respectively, through Tuesday’s close and outperforming other traditional auto makers such as General Motors Co. and Volkswagen AG .
“The market has been down for everyone, but they seem to be the ones coming out of it stronger,” said Vanessa Ton, senior industry intelligence manager at research firm Cox Automotive.
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One advantage has been that South Korea was simply better at dealing with the pandemic than the US. Competent government leadership! Wish we had that. Alas.
The brands also benefited from fewer pandemic-related disruptions at its factories in Korea, which build many of the models for the U.S. market, and a reputation for selling feature-loaded vehicles at a lower price than rivals, a formula that has given them an edge during economic downturns, executives and dealers say.
When I drove the 2020 Kia Telluride last year my main reaction was, “Hot damn Kia is going to sell a fuck ton of these in America,” and that’s exactly what’s happened.
Ryan Gremore, president of O’Brien Auto Team of Illinois, which owns Hyundai and Kia dealerships, said some of the group’s newer models, like the Kia Telluride, are helping change customers’ perceptions of the two brands.
“Consumers haven’t thought of Kia as the ‘bad credit’ brand it was,” Mr. Gremore said.
2nd Gear: Kia Has Also Struck A Deal With Its Workers
It sounds like management isn’t the only one reaping rewards, as Kia has also finally struck a deal with its workers.
South Korean workers for Kia Motors Corp have agreed to a freeze in base salary for the first time in 11 years under a preliminary deal with the automaker following 16 rounds of negotiations, a union official said on Tuesday.
Instead of a raise in base salary, each unionised worker would receive a one-time bonus of 150% of their monthly base pay, as well as an incentive worth 1.20 million won ($1,095) and a gift card worth 1.30 million won, the official said.
Kia also offered to restore a 25-minute overtime pay system which was scrapped in 2017, but it rejected proposals to raise the retirement age by five years to 65.
The two sides have had 16 rounds of negotiations since August and workers have staged several partial strikes since Nov. 25, costing the automaker about 30,000 vehicles in lost production, according to analysts’ estimates.
I would not be thrilled at getting a gift card from my employer instead of, you know, cash money, but the art of the compromise, etc.
3rd Gear: Honda Is Done Selling Cars In Russia
This is a bit of a strange one as Russia is a pretty big market for new cars (1.3 million sold from January to November according to Reuters) but Honda has decided it’s done selling there. This is apparently because it never had much of a foothold in Russia to begin with.
The company said it would keep its presence on the Russian market with motorcycle and power equipment sales, and retain its activities related to the after-sales service of its vehicles.
Honda, which has no plants in Russia unlike other Japanese carmakers such as Toyota and Nissan, sold 79 vehicles in Russia last month, a 50% drop from a year earlier, according to the Association of European Businesses.
Its sales from January to November were down 15% to 1,383 vehicles.
4th Gear: Fiat Chrysler Is Investing Millions In Poland
Good for Poland, though my main takeaway is that I was unaware that Poland, a member of the European Union since 2004, still used its own currency and not the euro.
Italian-American carmaker Fiat Chrysler will invest 755 million zlotys ($203.99 million) in its plant in Tychy in Poland, where new hybrid and electric Jeep, Fiat and Alfa Romeo models will be built, Deputy Prime Minister Jaroslaw Gowin said on Tuesday.
The investment comes as a boost to emerging Europe’s largest economy, which is hoping a switch to electric vehicles can help its auto sector catch up with regional rivals including the Czech Republic and Slovakia.
“Modern, hybrid and electric cars of the Jeep, Fiat and Alfa Romeo brands will start to leave the factory in Tychy in 2022,” Gowin wrote on Twitter.
There was also a not-so-insignificant correction to the original story.
(This story officially corrects headline and first paragraph to read 755 million zlotys (not 2 billion euros) after deputy PM revised his tweet)
5th Gear: Tesla’s Battle In China
Tesla is the front runner there when it comes to electric vehicles, but, locally, it will be getting a lot more competition in 2021. Tesla is also preparing to launch the Model Y there, which might increase its advantage, but regardless of what happens, this will be a fascinating battle to watch.
Trade group China Passenger Car Association predicts that Tesla will sell as many as 280,000 vehicles in the country next year. While that represents impressive growth over 2020, it would still leave more than 80% of the market up for grabs. PCA predicts total sales of 1.7 million new energy vehicles for 2021.
That means local premium brands Nio, Xpeng and Li are increasingly a threat — combined, the three companies already approach Tesla’s monthly sales tally. SAIC-GM Wuling Automobile Co. and BYD Co., which sell less expensive electric cars, are also gaining momentum.
Nio, the biggest of the Chinese trio, has steadily boosted sales of its electric SUVs that it sells at a price as much as 40% higher than Tesla’s Model 3. The company’s retail strategy includes clubhouses with showrooms, lounges, work spaces, theaters and even camp activities for customers’ children. A Tesla price cut earlier in the year added some pressure, but a subsequent reduction failed to have a similar impact, Nio CEO William Li said on a recent earnings call.
Volkswagen and Mercedes are also players in China but on a lesser scale. When people make the argument that, in fact, Tesla isn’t undervalued at all, a lot of the time they will bring up China, and the vast potential there. You can sort of see it!
Your employer isn’t your friend, though I wish me and my employer could all be one big family. (Just kidding I already have a family, I’d rather simply work my shift in the blog mines and log off.)
In mid-February, the automaker signed an agreement with the UAW. Among other things, the workers were given a 5 percent raise and permission to speak in the lunchroom.
Permission to speak in the lunchroom!
Neutral: How Are You?
It’s the eve of New Year’s Eve. I’m one of those New Year’s Eve grinches who doesn’t much respect the holiday or its traditions, though I think that might change this year, as this year has been (a few people have noted this) very bad. Excited for the roaring 2020s.