Hyundai Motor Co.’s offer of interest-free loans, a tactic it last used during the Asian financial crisis almost two decades ago, wasn’t enough to entice buyers in South Korea last month.
The carmaker’s sales in its home market fell for a second month in May, dropping 8.2 percent from a year earlier to 54,990 vehicles, according to a regulatory filing Monday. The company offered price cuts on most models, including the Aslan premium sedan, and an interest-free 36-month payment plan for buyers of Sonata and Elantra sedans, after its local market share sank to 32 percent in January, the lowest in at least 15 years.
Hyundai’s sales have also declined this year in China, the company’s biggest market, while gains in the U.S. have come on the back of a surge in incentives. The company plans to continue local marketing efforts to boost sales in South Korea, it said in a statement Monday.
“Hyundai’s profit has been struggling due to slowing sales, especially at home,” Shin Chung Kwan, an analyst at KB Investment & Securities Co., said before the sales figures were announced. “The carmaker will need to consistently take measures to improve sales and react flexibly and shrewdly to market conditions for the remainder of the year.”
Hyundai fell 2.2 percent to 154,500 won at the close in Seoul trading, before the announcement. It is the lowest level for the shares since Nov. 5. South Korea’s benchmark Kospi index dropped 0.6 percent.
Hyundai’s market share in South Korea is under siege from foreign brands including BMW, Mercedes-Benz and Toyota, which collectively posted a 33 percent gain in deliveries in the first quarter, according to data from the local vehicle importers association. Ssangyong Motor Co., Renault SA’s Korean venture and Hyundai affiliate Kia Motors Corp. also registered gains in the period, while Hyundai’s sales fell 3.4 percent.
South Korea accounted for 46 percent of the automaker’s annual revenue and 34 percent of total production in 2014, according to company figures and data compiled by Bloomberg.
The last time Hyundai offered interest-free loans was in 1997, when South Korea accepted an International Monetary Fund bailout after a foreign-currency debt crush sent companies into bankruptcy and the country into recession.