Hyundai Ruins The US Car Market For Its Competition

Hyundai and its stablemate Kia had almost no presence in the US car market five years ago. Hyundai and Kia now have 7.8% of monthly domestic sales, higher than Nissan, and have begun to approach Chrysler’s 8.6% share.

Hyundai’s cars are well-regarded and have started to replace Japanese models as the low-cost, high-quality products in the minds of many Americans.

Hyundai is a significant threat to Toyota (NYSE: TM), Nissan, Chrysler and VW, which has nearly no market share in the US. It competes in the value car market and mid-tier sports car sector. These are among Hyundai’s strong spots. VW has said its goal is to pass Toyota in worldwide sales. That cannot happen without a larger market share for its cars in the U.S.

Hyundai has become a viable alternative to a number of Toyota cars. Toyota’s market share has dropped from nearly 18% in late 2009 to about 15% this year, due primarily to damage done to its reputation by recalls. Hyundai’s Sonata competes with Toyota’s mid-tier sedans. Its Santa Fe is a challenger to Toyota’s lower end SUVs. Kia has a number of sedans and coupes aimed at the low end of the market once dominated by Toyota .

Nissan and Chrysler have the most to be concerned about as sales of the Hyundai line increase. Neither company has gained market share in the last year. Nissan has a limited line of mid-tier sedans, modestly priced sports coupes, and mid-level SUVs. Chrysler has the advantage of its strength in the minivan market and its Jeep franchise. Otherwise, the No. 3 US manufacturer has a modest line of coupes, sedans, and sports cars. Many of these compete directly with Hyundai products.

Nissan, VW, and Chrysler in particular have a problem if Hyundai’s unit sales continue to grow. Toyota, at least, has a model line-up and balance sheet to guard its US share.

Douglas A. McIntyre