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Investigate Why Hyundai Motors Market Share Plunged in 2015 in China Market

Essay by   •  September 13, 2016  •  Coursework  •  489 Words (2 Pages)  •  1,290 Views

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Investigate why Hyundai motors market share plunged in 2015 in China market (mainland)

Hyundai motors saw its Chinese market share fall in 2015. The setback due to combined reasons, three of which definitely cannot be ignored.

The first one must be the problem with customer needs. Hyundai motors’ short-sighted strategy mainly caused the drop in market share. In 2015,Chinese consumer performances shifted towards Sport Utility Vehicles for its high performance-to-price ratio, While Hyundai motors’ leading vehicles were still cars. Moreover,some hot-selling cars would not be launched in china. In such a fierce competitive environment,customers were easily stolen by other rivals like Chinese local auto brands. Loss of clients to the Hyundai Company has brought huge losses in china market. Keep the change of customer needs are always important if Hyundai do not want buyers to turn their backs to the brand.

The products of Hyundai motors also exposed some problems. The biggest one was a lack of product strengths due to the R&D shortage. During the first half of 2015,no Hyundai vehicles had been put into market as a dominated car except Sonata9. However, the large price gap between sonata9 and sonata8 did not be simply accepted by consumers. Meanwhile, other models of Hyundai like ix35 had many years of sales, which were less competitive in China’s auto market. The sagging consumption finally trapped Hyundai in a cooling-off period. After all, product aging was a big issue for Hyundai. The disorder product updates and unclear product positioning led to the poor performance in China as well. Hyundai had been implementing a marketing strategy that called “multi-generation”, which means the company will not “retire” any old cars when new products launch. They can both be purchased at the same time and the price of old version was unchanged. Over time,this aggressive sales approach may cause a series of problems. For instance, “multi-generation” may aggravate internal competition among Hyundai vehicles and confused costumers in purchasing decisions. The more generation Hyundai put in market, the greater the similarity of products positioning. Comparable cars eventually left consumers an impression of lacking innovation and capacity.

The third major problems came from the competitors. The explosive sales growth of Chinese local makers mostly declined Hyundai’s market share in China, including CHANA, Great Wall. These independent brands’ product has rapidly grown in recent years, together with lower price and not bad appearance, known as the first choice of Chinese customers in fourth and fifth-tier cities. Hyundai saw their shares decrease particularly in these areas. Furthermore, Hyundai motors lowered the guard against other competitors after surging sales in china before 2015. So it was not surprised that Hyundai’s market share had been eroded as large numbers of new Japanese vehicles launch and price reduction of German cars.

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