Looking more interesting than its predecessor, the new Creta is roomier. Picture: DENIS DROPPA
Looking more interesting than its predecessor, the new Creta is roomier. Picture: DENIS DROPPA

While competitors spend billions of rands on manufacturing and environmental projects, and change the way they do business to meet the demands of new motor industry policy, life at Hyundai Automotive SA carries on as it always has. 

It may sell one of SA’s leading motor brands, but, as an importer, Hyundai doesn’t have to worry about doubling manufacturing volumes, supplier transformation, local content or any of the other issues preoccupying vehicle and components manufacturers as they prepare for the launch later this year of the government’s SA Automotive Masterplan.

CEO Niall Lynch says: “I don’t think anything in the masterplan directly affects us. Life here continues as normal.”

He wishes it were otherwise. Like predecessor Alan Ross, Lynch, who has been in charge since 2016, has made no secret of his desire for Hyundai vehicles to be built in SA. Proposals have included shared use of a touted multibrand assembly plant in East London. The plant never happened.

The problem is that the Hyundai vehicle manufacturer, in South Korea, likes to invest in markets where it owns subsidiaries.  Hyundai Automotive SA is part of Imperial Holdings. 

Lynch says: “We continue to raise the issue with Korea, but because we are merely an importer and distributor, we are not a priority. In any case, they currently have plenty of spare capacity overseas.”

So much so that the annual output of the entire SA motor industry is less than half the capacity of a single Hyundai plant in South Korea.

Things might change if the manufacturer were to launch a bakkie (the Hyundai  vehicle sold under that brand name locally is not what most South Africans consider a true bakkie). SA has become a global manufacturing centre for working and leisure pick-ups, with Toyota, Ford, Isuzu and Nissan all spending billions of rands on their SA subsidiaries. Most vehicles are exported. Ford this month announced a R15.8bn investment.

The global Hyundai group is actually due to launch a pick-up, the Santa Cruz, in the US this year. However, the group says the vehicle doesn’t fit the traditional profile because priorities don’t include towing, payload or ground clearance. Rather, the low-slung vehicle is described as a “crossover”, meaning it’s aimed at car buyers looking for leisure versatility.

Hyundai Automotive SA sales and operations director Stan Anderson says the local company will keep Santa Cruz “on the radar”, but admits it wasn’t designed with SA or African conditions in mind. He adds: “There’s been talk for years that Hyundai might one day build a traditional pick-up. If and when it happens, SA’s status as a global supplier could work in our favour.”  Until then, the company will do what it does best: sell vehicles. Last April, during the first month of the lockdown, not a single new Hyundai vehicle was sold. But in the second half of the year, dealer sales actually outperformed 2019.

That wasn’t enough to compensate for loss of business from the car rental market, which usually accounts for about 16% of Hyundai sales. Loss of foreign tourists and the move to online meetings slashed travel and rental demand. With lockdown still in place, albeit at a reduced level, and SA on international watchlists because of the B.1.351 variant first identified here, things are unlikely to improve soon.

Having sold 35,000 vehicles in 2019, Hyundai dropped to about 27,500 last year. While the overall SA market expects to return to 2019 levels only in 2023, Hyundai hopes to do so this year. It started promisingly. In January, traditionally a weak sales month, it shifted 2,622 vehicles. That made it SA’s fourth most popular brand, behind only Toyota, Volkswagen and Ford.

Anderson hopes a series of new vehicles launches will increase the momentum.  They include all-new or updated versions of the Tucson, i10, Kona and H1 bus. The company will also introduce the Palisade seven-seater SUV for the first time.

What buyers won’t see is new versions of the Accent and Sonata sedans. Hyundai is concentrating on hatchbacks and SUVs (plus the non-bakkie bakkie) for the foreseeable future.

There are also no plans for electric vehicles (EVs). The government is under pressure to encourage sales and the local motor industry has been warned that unless it starts to build EVs soon, it risks becoming globally irrelevant.

Lynch says Hyundai has “absolutely no plans” to import EVs soon. “You need government incentives to make them affordable,” he says. “At the moment, they can’t compete on price in SA with the internal combustion engine.” Despite industry pleas to the government to make them cheaper, Lynch says: “Frankly, I think it will be some years before the situation  changes sufficiently to make it worth our while.”

He expects Hyundai prices in 2021 to increase 4%-5% – rand permitting. “If it stays around R15/$, I think we can meet that target.” As an importer, the company is wholly at the mercy of exchange rates, unlike manufacturers which can hedge through imports and exports.

Besides SA, Hyundai Automotive also sells vehicles in Namibia, Botswana and Eswatini. Lesotho customers cross the border to buy in SA. Other African markets are managed from South Korea – though SA was last year offered the Zimbabwe franchise. “It was not a difficult decision,” says Lynch. “We politely declined.”

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