Hyundai and Kia See Sales Rise as Inventories and Discounts Increase

U.S. Light-Vehicle Sales Rise for the 11th Consecutive Month in June

Hyundai and Kia Benefit from Rising Inventories and Generous Discounts

U.S. light-vehicle sales continued to increase in June, marking the 11th consecutive month of growth for Hyundai and Kia. The rise in sales was attributed to higher inventories and more generous discounts, particularly related to July 4 holiday promotions.

Hyundai’s Sales Performance

Hyundai reported a 10 percent increase in deliveries, totaling 69,351 vehicles in June. However, the brand experienced a 2 percent decline in retail sales, which had been a strength for the brand in recent months. Among Hyundai’s key models, the sales performance was mixed, with the Elantra showing a 60 percent increase, Tucson up by 13 percent, Santa Fe up by 9 percent, Ioniq 5 up by 10 percent, Palisade down by 14 percent, and Sonata off by 19 percent.

Kia’s Sales Performance

Kia also saw positive sales growth in June, with an 8 percent increase to 70,495 vehicles. This capped off a successful first half of the year for the brand, with record deliveries of 394,333 vehicles, up 18 percent compared to the previous year. Kia’s key models had mixed results in June, with sales of the Forte, K5, Soul, Telluride, and Seltos rising, while Sportage, Sorento, and EV6 volume declined.

Continued Demand for Electrified Vehicles

Both Hyundai and Kia continued to benefit from the demand for new and redesigned electrified vehicles. The brands’ strong retail partners and timely product offerings have attracted new and existing customers. Genesis, a subsidiary of Hyundai, also experienced growth with a 33 percent increase in sales.

Hyundai Motor Group’s Success

Hyundai Motor Group, which includes Hyundai, Genesis, and Kia, has been a standout in the market for the first half of the year. The combined U.S. sales for the three brands surged 18 percent to 749,685 vehicles. According to Cox Automotive, the group has surpassed Stellantis to become the fourth best-selling automaker in the U.S.

Positive Outlook for Kia

Kia’s first-half retail sales rose 17 percent to 362,933. The company reported a 40 percent increase in sales of electrified models and a 25 percent increase in SUV deliveries in the first half. Kia expects to maintain momentum throughout the rest of the year with the planned introduction of the EV9, an all-electric three-row crossover.

Forecast for U.S. Light Vehicle Sales

Industry forecasters predict that U.S. light vehicle sales will rise by 16 to 23 percent in June. This increase is based on estimates from J.D. Power-GlobalData, Cox Automotive, and S&P Global Mobility. The growing sales momentum is driven by pent-up demand, improving inventory, selection, and rising discounts.

Inventory Levels and Transaction Prices

Inventory levels in June increased by 17 percent compared to May and were 45 percent higher than June 2022. Retail transaction prices remained relatively flat compared to the previous year with an average of $45,978 in June. Incentive spending on new vehicles significantly increased to an average of $1,798, nearly double the level from the previous year.

Leasing and Financing Trends

In June, leasing is expected to account for 21 percent of retail sales, up from a low of 16 percent in September. The average monthly finance payment for a new vehicle increased to $726, while the average interest rate for new-vehicle loans rose to 7 percent.

Outlook for the Second Half of the Year

Analysts expect the sales pace to cool in the second half of the year due to higher interest rates and affordability concerns. However, the strong performance in the first half has led several analysts to raise their outlook for 2023 sales to 15 million to 15.2 million, compared to 13.8 million in 2022.

Quotes from Industry Experts

“We’re still in a pull market, but getting much more normalized over this period, which puts pressure on pricing, and of course pressure on manufacturer profits.” – Mark Wakefield, head of AlixPartners’ automotive practice.

“This road to recovery for the industry has been a winding one. With many automakers committing to better aligning production and demand, we might be on the cusp of seeing what a new normal sales pace looks like compared to the pre-pandemic years when bloated inventories and deep discounts shaped the industry.” – Ivan Drury, director of insights at Edmunds.

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