As global automakers raise prices in the US market to respond to new Washington import tariffs, South Korea’s Hyundai Motor Group is taking the opposite approach: slashing prices and rolling out aggressive zero-interest financing to win over US car buyers.
Hyundai Motor Co.’s US subsidiary recently launched a promotional blitz offering 60-month zero-interest loans on popular SUV models, including the Santa Fe, Santa Fe Hybrid and Palisade, through Sept. 2.
Buyers can also defer their first payment for up to 90 days, a tactic aimed at tapping into price-sensitive consumers amid economic uncertainty.
The move is a high-stakes gambit for the top Korean automotive group, which encompasses Hyundai Motor, sister firm Kia Corp. and premium brand Genesis, as it seeks to cement its position in its largest overseas market.
BOLD PRICING STRATEGY
The conglomerate’s bold pricing strategy stands in stark contrast to rivals such as Toyota and BMW, which have hiked prices in recent weeks following the US government’s imposition of a 25% tariff on imported vehicles in April.
Analysts said Hyundai has chosen to absorb the hit in margins in exchange for stronger market positioning.
“With post-tariff demand having largely been front-loaded in April and May, we’re entering a softer period where price sensitivity is paramount,” said Charlie Chesbrough, senior economist at Cox Automotive.
Hyundai’s promotions go beyond interest-free loans.
The automaker is also offering cash discounts of up to $3,500 on 19 models.
Santa Fe and Santa Fe Hybrid buyers can receive $3,500 off if paying in cash, while the Palisade and Tucson are being discounted by $2,750 and $1,750, respectively.
These offers, originally slated to expire in early July, have now been extended until early September.
Kia has joined the fray with its own discounts ranging from $300 to $1,000 on select models.
Meanwhile, Hyundai and Kia electric vehicles, such as the IONIQ 5, IONIQ 9 and Niro EV, are temporarily discounted by as much as $7,500.
STRATEGIC TIMING
Since the imposition of the 25% auto tariffs in early April, Japan’s Toyota has raised its vehicles sold in the US by $270 on average to make up for its declining margins. BMW has also hiked its vehicle prices by 1.9%.
The timing of Hyundai Motor Group’s bold incentives is strategic.
Although Hyundai and Kia’s combined US market share has climbed to 11% in the first half from 10.5% a year earlier, competition is intensifying.
US automaker Ford launched a zero-interest 48-month loan program for all models beginning July 8, while Japan’s Nissan is offering similar 60-month financing deals on key SUV models such as the Rogue and Pathfinder.
Analysts said the price war brewing in the US auto market presents risks.
Prolonged discounting could squeeze industry-wide margins and raise concerns among investors already wary of slowing global auto demand and rising production costs.
For now, however, Hyundai is doubling down, betting that affordability will be the deciding factor in a shifting market, and that buyers will reward the company’s price-first approach, industry officials said.
“In a market this tight, consumers remember who helped them save,” said an industry analyst.
By Gil-Sung Yang and Jung-Eun Shin
vertigo@hankyung.com
In-Soo Nam edited this article.
