Leading automakers in South Korea have unveiled their 2017 lineups and are showcasing new technology at the Seoul Motor Show.
IHS Markit Perspective:
- Significance: About 27 global automakers – including market leaders Hyundai, Kia, and GM Korea – are showcasing new models focused on future and alternative-powertrain vehicles at this year's Seoul Motor Show.
- Implications: Automakers have revealed growth targets for 2017 and aim to fight each other for control of the local market by bringing in new models.
- Outlook: IHS Markit expects that light-vehicle sales in South Korea will nudge down 0.2% y/y to 1.8 million units in 2017, mainly on a relatively sluggish macro economy and uncertainty surrounding the upcoming elections.
The 2017 Seoul Motor Show kicked off today (30 March) at the Korea International Exhibition Centre in Ilsanseo-gu, Gyeonggi Province with a focus on future and alternative-powertrain vehicles. The show will run until 9 April (see South Korea: 22 February 2017: Seoul Motor Show 2017 to start on 30 March). A total of 27 automakers have confirmed their presence at the event, along with a few component suppliers, according to a report by the Yonhap News Agency. Tesla is not participating, although it recently opened its two showrooms in South Korea (see South Korea: 21 March 2017: Tesla opens second showroom in South Korea). Nearly 300 models are being displayed at this year's show.
Hyundai has launched a gasoline (petrol) hybrid version of the Grandeur sedan in South Korea. The automaker aims to sell over 10,000 units a year of the 2.4-litre Grandeur gasoline hybrid sedan in the domestic market. The vehicle is priced between KRW36 million and KRW40 million. "We do not have any specific plan to sell the new model in overseas markets," said an unnamed Hyundai official. Hyundai also exhibited its next-generation fuel-cell electric vehicle (FCEV) concept, the Future Eco (FE) Fuel Cell Concept, which has a range of 800 km on a single charge. Hyundai first displayed the concept during the 2017 Geneva Motor Show. Hyundai is also showcasing its IONIQ autonomous vehicle. The automaker is also displaying its high-performance N concept, the RN30, which was first introduced during last year's Paris Motor Show, and i20 Coupe WRC. Under its premium brand, Genesis, Hyundai showcased a special edition of the G90 sedan. The vehicle is distinguished from the other G90 models by two-tone paint finishes. Three versions of the G90 Special Edition are on display at the show.
The automaker has revealed further developments for its future mobility strategy. It is presenting key elements of its connected car roadmap, which outlines four main objectives to ensure smart connected technologies provide greater convenience and efficiencies for drivers, according to the press statement. The first is proactive caring, to remotely diagnose and fix vehicle issues before they become evident. The second is smart convenience, to offer customers regular updates to vehicle software and features. The third is cost efficiency, to bring cost-saving efficiencies to customers by analysing their driving patterns and fuel-economy history. The fourth is connected efficiency, to ensure connectivity-reliant actions happen at optimum times, such as automatically updating software while the car is charging.
It also announced plans to develop its own Connected Car Service Platform (ccSP) platform. This will allow customers to connect to various Internet of Things (IoT) services offered by telecommunications providers and global appliance services. Hyundai demonstrated "Home to Car" and "Car to Home" interconnected services during the show. "Home to Car" services will allow drivers to start their vehicles and open or close doors through speech. "Car to Home" services will connect customers with smart home services, including home lighting, climate control, and audio systems. "Controlling vehicles via voice assistant is something that could become commonplace in the not-too-distant future," said Hyundai executive vice-president and head of auto intelligence division Seung-Ho Hwang. "We are working with various companies in Korea and around the world to ensure that all of our platforms are compatible and that Hyundai customers will be able to interact with the Internet of Things in ways that have never before been possible." The connectivity services demonstrated at the show will be available in the next few years, with "Home to Car" services expected in 2018 and "Car to Home" available in 2019.
Affiliate Kia has revealed the new Stinger GT four-door fastback sedan for the South Korean market. The vehicle is powered by a choice of three engines: 3.3-litre twin-turbo V6, 2.0-litre turbo gasoline, or 2.2-litre turbo diesel. The engines are mated to a six-speed automatic transmission. The Stinger will be available with a choice of rear-wheel- and all-wheel-drive options. The vehicle is expected to start selling in South Korea in May. Kia revealed the new Stinger at the 2017 North American International Auto Show (NAIAS) and then at the 2017 Geneva Motor Show. The vehicle takes the image of a Kia GT concept revealed at the 2011 Frankfurt Motor Show (Germany) and also displayed during this year's Seoul Motor Show, with its design overseen by Kia chief designer Peter Schreyer. In South Korea, the automaker plans to launch the vehicle with an independent Stinger badge without the Kia logo. For the global market, the vehicle will be shipped with the Kia logo. According to IHS Markit's light-vehicle production forecast, the Stinger (D-Hatch in our database) will be based on the automaker's M platform and will be produced at Kia's Sohari plant from May 2017. Our light-vehicle sales forecast data show that the vehicle will be launched in the United States in July 2017. We forecast that the Stinger will register global sales of about 15,710 units in 2017, with the US market accounting for about 85%. In South Korea, the vehicle is expected to register sales of 242 units this year.
Kia also demonstrated its DRiVE WISE advanced driver-assistance systems (ADAS) with an advanced VR theatre. Kia is also exhibiting a series of connectivity technologies, such as "Car to Home" technology.
General Motors (GM) Korea has launched the Chevrolet Bolt electric vehicle (EV) in South Korea. The automaker confirmed that the range of the vehicle is 383 km on a single charge. Earlier this month, the automaker began accepting booking for the vehicle. The delivery of the Bolt EV is expected to begin in April. The vehicle is priced at KRW50 million. It will be eligible for a KRW5 million government subsidy and other tax incentives for the alternative powertrain vehicle, which will further lower its price to about KRW30 million.
SsangYong has revealed the new G4 Rexton sport utility vehicle (SUV) during the show. The new G4 Rexton is expected to further strengthen Ssangyong's SUV-focused lineup. The vehicle is based on the K100/Y100 platform. Production is expected to start from March 2017 at the automaker's Pyongtaek plant in South Korea, according to our light-vehicle production forecast data. In South Korea, the vehicle will compete in the D-SUV segment against models from Hyundai, Kia, and Renault Samsung among others. IHS Markit expects the G4 Rexton to register sales of 10,081 units in South Korea in 2017 and 14,500 in 2018. "With the launch of the G4 Rexton, SsangYong is re-entering the world of luxury SUVs, that it is back in the running for the top slot in that segment," said Anand G Mahindra, executive chairman of Mahindra and Mahindra (M&M), the parent of SsangYong. "The Mahindra Group will collaborate with SsangYong especially in the area of electric vehicles to tackle the changing needs of the first segment," said M&M.
BMW is displaying the M760Li xDrive sedan at the show. BMW is planning to add more fuel-efficient models to its lineup in South Korea. They include the 330e plug-in hybrid electric vehicle (PHEV) and the BMW X5 xDrive40e SUV, subject to approval from the South Korean government before they go on sale, according to an unnamed BMW official. Mercedes-Benz is showcasing the AMG GT gasoline hybrid concept. "The Korean market is extremely important. I'd say it's the eighth or seventh market in the world .... We [will] continue investing in the Korean market, not only showing nice and useful products but also investing a lot in the infrastructure and customer services ," said Mercedes-Benz Korea president and CEO Dimitris Psillakis.
Honda revealed during the show the Clarity fuel cell electric vehicle (FCEV), which it claims can travel up to 589 km on a full tank of hydrogen. Toyota is also exhibiting an FCEV concept, the Lexus LF-FC, at the expo.
South Korea-based IT company Naver is showcasing its autonomous vehicle and demonstrating how it collects data on the road (see South Korea: 20 February 2017: South Korean IT company wins licence to test autonomous vehicle).
Outlook and implications
New-vehicle sales in South Korea including passenger-vehicle (PV) imports grew by 7.6% year on year (y/y) to 135,824 units during February, according to a report by the Yonhap News Agency and data compiled by IHS Markit. The strong growth in South Korea's new-vehicle sales during the month resulted largely from improved sales for Hyundai, Renault Samsung, and SsangYong. During the month, Hyundai returned to positive territory on the back of the growing popularity of its new Grandeur sedan launched in December 2016. The vehicle registered sales of 10,913 units in February. Kia returned to positive sales but felt the effects of a high base of comparison. GM Korea posted a decline during February mainly on a high base effect. Renault Samsung's strong result last month came as the automaker recovers from its low levels last year on the back of continued popularity of new models launched last year, while SsangYong capitalised on higher demand for SUVs. Additionally, the growth can also be attributed to an improvement in imported PV sales. The expansion comes amid the ongoing stop-sell order on Audi and VW vehicles as the VW Group continues to grapple with the South Korean authorities in an acrimonious dispute.
Looking further ahead into 2017, most of the automakers have already declared their sales targets and growth plans. Hyundai, along with its affiliate Kia, aims to sell about 8.25 million units globally in 2017, up 4.9% y/y from the 2016 sales figure of 7,868,025. GM Korea aims to sell 194,000 Chevrolet-brand vehicles in South Korea during 2017, up 7.6% y/y, while Renault Samsung Motors has announced that it is aiming to sell 270,000 units during 2017 globally, up 5.1% y/y. Meanwhile, SsangYong aims to achieve a 3.5% y/y increase in its global sales to 161,000 units in 2017. The automaker expects that this growth will come on the back of the rising popularity of its Tivoli nameplate.
We expect that new light-vehicle sales in South Korea will nudge down 0.2% y/y to 1.8 million units in 2017. Sales in the largest segment, passenger vehicles, are expected to edge up 0.2% y/y to 1.6 million units during 2017, while LCV sales will slip 2.9% y/y to 197,315. This moderate decline is forecast on an expected weaker macroeconomic environment and political risk. Growth in GDP and private consumption are expected to slow in 2017. According to IHS Markit data, South Korean GDP is expected to grow by 2.7% in 2017, down from a 2.8% improvement in 2016. Around the second or third quarter, South Korea is also due to hold a presidential election. This implies that the economy will be troubled by a couple of factors, resulting in uncertainty for investments and expenditure, according to IHS Markit's South Korean light-vehicle sales forecasting analyst, Andy Bae.
Sales of alternative-powertrain vehicles, including EVs, hybrids (HEVs), PHEVs, and FCEVs, are growing in South Korea. Their sales in the country grew by 42.2% y/y to 4,237 units in January. The confidence of South Korean automakers and buyers in alternative powertrains has been boosted by the government's commitment to spending KRW150 billion in assisting the research and development (R&D) of alternative-powertrain vehicles during 2016–20. It aims to have about 820,000 HEVs, 200,000 EVs, 50,000 PHEVs, and 9,000 FCEVs on the country's roads by 2020. It is also looking to have nearly 1,400 EV charging stations and 80 hydrogen fuel stations in place across South Korea by 2020. According to our light-vehicle powertrain forecasts, production of plug-in vehicles, which include EVs and PHEVs, will grow to 75,461 units in South Korea in 2017, up from an estimated 19,857 in 2016. The annual total is expected to increase further to more than 110,000 units by 2020. IHS Markit also forecasts that annual production in South Korea of FCEVs, a new technology, will grow to 2,856 units by 2020, up from 700 in 2016.
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The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.