Hyundai on track for record sales, Europe boss says

Hyundai Europe CEO Michael Cole has the automaker chasing a sales level not seen since before the pandemic. He is "absolutely confident" the brand can surpass its European sales best of 562,386 set in 2019. Cole refuses to sacrifice margins to reach the goal by directing large volumes toward the short-term rental and fleet channels. He said Hyundai’s emphasis will continue to be on the higher margin private customer sales channel. He outlined Hyundai’s plans in an interview with Automotive News Europe Correspondent Andrea Malan.

How did 2023 start for the Hyundai brand in Europe?

First of all, in 2022 we did a much better job than most in managing our supply, so we were delivering cars much quicker. What you saw in the first six months of this year is that many carmakers' sales rebounded strongly because they were so badly affected in the first half of 2022. As a result, we at Hyundai have lost some market share, but we are not worried. If we compare 2023 with 2019, including both passenger cars and LCVs [light commercial vehicles], we had a 2.8 percent share then and now we are at 4.2 percent only with passenger cars. I'm very happy with that.

What is your forecast for 2023, both for Hyundai and the industry?

I am positive that this year will be a record year for us, even compared with 2019, despite overall industry sales still being down more than 20 percent after six months compared with 2019. Overall industry figures will remain up at year-end. We are going to see double-digit growth, but I don't think you will the same growth that we experienced in the first half of 2023.

Will Hyundai’s growth also slow down?

Not particularly. We are at a pre-COVID level, therefore, I'm absolutely confident we can deliver a record full-year volume.

How about 2024?

Hopefully we will continue that way. One of the challenges is capacity. Our European plants in the Czech Republic and Turkey are running pretty much at full capacity now, so I think we have to be realistic about next year. We always want to grow, but growth has a certain limit. Specifically, we should try to get as far as we can in sales to private customers. We have already been growing our market share there, which at 5 percent-plus is higher than our overall share [of passenger car sales, which after six months was 4.2 percent, according to ACEA].

When we spoke last year you thought there might be a slowdown in orders this year. Did that happen and what is your forecast for the rest of 2023?

The total order intake in the first five months of 2023 was lower than it was in the same period of last year, but that was actually by design because we wanted to rebalance. We focused on growing the private sales channel and not necessarily pursuing high-cost short-term sales channels. The rental market does get you brand exposure, but we have to do it in a way that supports the brand’s progress.

Hyundai will not follow Tesla’s price cuts in Europe because you believe it’s more important to keep the brand’s residual values high, which helps customers’ monthly payments lower. Sales of the Ioniq 5, which is a direct competitor to the Tesla Model 3, are down 10 percent versus 2022. Did it lose sales as a result of the price war?

The Ioniq 5’s slowdown was due to the low supply we had available at the start of 2023, which was much lower than 2022. That was partly due to a high demand at the end of 2022. One reason for this was a change in the incentives offered to EV buyers in Germany. That triggered a high level of sales for the Ioniq 5 at the end of 2022. Therefore, we entered 2023 with a very low inventory. Moreover, we had to share the global supply as the Ioniq 5 was rolled out in more regions during 2022.

If I order a Ioniq 5 now, when will it be delivered?

Depending on the trim, in four to five months.

Is there any cannibalization effect by the Ioniq 6?

I certainly wouldn't attribute any Ioniq 5 reduction in volume to be down to the Ioniq 6. The two cars have different customers because they are quite different, in particularly in terms of their interior packages.

When is the Ioniq 7 SUV coming?

It will arrive in Europe in the second half of 2024.

What comes after the Ioniq 7, an Ioniq 4 or an Ioniq 8?

I can't tell you that yet. The current Ioniq lineup is based on the global EV-only electric global modular platform (E-GMP). Some of the next products will probably be on a different platform. Does that mean we will continue the Ioniq name or not? That is something we have to evaluate. I think one thing is critical: Ioniq lineup is global, so it has to be a global car. If it's a regional car then it probably wouldn't be an Ioniq.

Would the next-generation Kona become part of the Ioniq lineup?

If it's a derivative vehicle, than it would take the name of the original vehicle. So, a future Kona will remain a Kona unless we decide to put it on a dedicated BEV [battery electric vehicle] platform.

Renault will launch the Renault 5 small BEV next year and Volkswagen is going to follow with a sort of Polo-sized BEV. When does Hyundai plan to add a small BEV that will slot in below the Kona?

I can't announce anything now. When I look at the requirements that I think European consumers will continue to have in terms of body styles and vehicle size, within the range of 11 BEVs that we will have available globally, some of them will be smaller than the current Kona. For the European market, I believe we need to keep the customer base that we have built with our A- (minicar) and B-segment (small) cars. We don't want to walk away from an important part of the market.

You mentioned the minicar and small segments, but most brand selling in Europe are leaving the former. Will the electric minicar segment be left to Chinese?

I think you could have a vehicle that covers both segments, like a merger of the A and B segments. I think it would work for EVs.

Is Hyundai still targeting a BEV share of up to 65 percent in Europe by 2030?

With the Fit for 55 regulation, we will need to achieve a share of 65 percent zero-emission vehicles in the region by 2030.

Last year Hyundai’s BEV share was 16 percent. What will it be by the end of 2023?

I wouldn't put a number on it yet. I think it's important we keep growing, but it won't be a big step.

What is the share so far in 2023?

We are at around 16 percent, so it’s very similar to last year. But we are introducing the second-generation Kona EV during the third quarter so we are in the middle of a model change; the Ioniq 6 is just starting to enter some markets such as the UK, where we launched in the second quarter; and supply is starting to improve for the Ioniq 5, which is good because it means we can address some of the customer order bank. Therefore, I'm confident that we will continue to grow our EV volumes.

Chinese automakers coming to Europe are targeting the compact SUV segment, offering prices that are 5,000 euros to 6,000 euros lower than the first-generation Kona. Will the new Kona’s price be adjusted to better compete with the Chinese?

Pricing is still under review. The early indication we are getting is that residual values will be very good for the new Kona, which we are not surprised about given the upscaling of the product. We do consider the retail price, but we are focusing more on the monthly payments [of lease and rental contracts]. Our monthly payments might not be the lowest, but when you take the overall package  -- the standard equipment, the quality and our service network  -- into consideration, I think we are very competitive.

When will Hyundai’s EVs reach price parity between with internal combustion engine (ICE) cars?

I don’t have an answer right now. We saw the situation become more challenging last year when all the raw material costs went up. A lot depends on where we are able to source raw materials and what availability there is and how we recycle raw materials. The cost of the battery is very high proportion of the cost of an EV, and in recycling there is a lot of value, especially in an old EV car battery. We have to get into recycling and hopefully find enough of the different raw materials. We also might start to use different battery technologies, such as solid state of lithium iron phosphate.

Does that mean this won’t happen with the current technology?

I think it's difficult if the raw materials remain fairly scarce. It’s a matter of supply and demand. But it is not impossible. We want to get to a point where we can make EVs affordable to a wider part of the European market. I have no doubt that we can get there in terms of the product. I think we will get there in terms of reasonable pricing. Will it be the same pricing as an ICE (internal combustion engine), who knows? But I think the barrier to success will still remain largely around infrastructure. I do worry that in some markets the pace of that infrastructure development is not there.

One growing issue with BEVs is their efficiency in terms of energy consumption. In the past when people bought a large SUV they didn't care much about consumption because fuel was relatively cheap -- and they didn’t have any range anxiety. When range become an issue, it affects the way you drive and use the car. Do you think the need to increase efficiency will slow or even stop the growth of SUVs?

When you have a flat platform and a long wheelbase [as EVs have], it does give you greater opportunity to create more spacious vehicles on a smaller footprint. Therefore, I think the trend toward a kind of crossover styling will continue. As far as the transition to EVs, energy consumption is going to become important, but for now, I don't think it's going to affect [purchase decisions]. People still want their body style, but just with an electric powertrain rather than an internal combustion engine. I think it could evolve, but only in the long term.

EV penetration in Europe differs depending on the markets. Is it just a matter of infrastructure availability or is it due to something else?

I think infrastructure is probably the biggest factor, but not the only one. GDP and wealth play a role, because today’s EVs are still more expensive than internal combustion cars. That is why we try everything we can, through monthly payment leases, to bring costs closer to parity. However, I think in some markets there might still be some cultural or social factors. The Scandinavian markets are moving much faster toward this idea of electrification while some markets in southern Europe don't feel the same urgency yet.