For the first time, Korean automakers sold more than Honda in the US

In 2021, Honda was overtaken in the United States by the combined forces of two South Korean brands, Hyundai and Kia.

Together, the two Seoul-based brands ranked fifth in US sales, delivering 1,439,497 cars, trucks and minivans. Honda, based in Japan, sold 1,309,222.

Looking at these traditional brands alone, Hyundai and Kia surpassed Honda by more than 130,000 vehicles, the first time the combined brands surpassed the company.

If their respective luxury brands are included—Hyundai Genesis and Honda Acura—the margin is much narrower, just 22,000 sales, but Korean brands still come out a little ahead. These sales figures were provided by the automakers.

For Kia, it was the first time the brand had sold more than 700,000 vehicles in one year. Hyundai set a retail sales record — that is, excluding sales to fleet customers — and increased its market share by eight-tenths of a percentage point.

It might seem strange to compare two automakers with just one, but Hyundai and Kia are closely related. Hyundai Motor Group, Hyundai’s parent company, owns a controlling interest in Kia, and the two companies share a lot of engineering across their various models.

In the United States, Kia and Hyundai operate as two separate companies, with different US headquarters and executives, different dealerships and even different factories — Kia makes cars in Georgia, while Hyundai has a factory in Alabama. But taking a global view, they are like two members of the same family.

Both brands have come a long way from their former identities as just basic transportation providers to the budget conscious. It hasn’t been a steady climb, however.

The two brands’ combined market share came close to Honda’s a decade ago, according to data from automotive website Edmunds.com, but the gap widened again before Korean brands surged in recent years to finally overtake Honda.

Hyundai and Kia saw sales increase by around 20% in 2021. Honda’s sales increased by just 8.2%. In announcing its sales, Honda noted difficulties with supply chain problems.

Both Hyundai and Kia have acknowledged that the industry-wide shortage of microchips has also created challenges for them. None of the companies said what was done to get around this.

“Remember, with this chip shortage, the brand that has the broadest supply is the brand that is going to win,” said Vanessa Ton, senior analytics manager at Cox Automotive, a company that owns multiple automotive websites and service companies. of car dealerships.

In addition to apparently better handling their supply of computer chips, according to Ton, Hyundai and Kia have also benefited from some attractive products, particularly the three-row Hyundai Palisade and Kia Telluride SUVs, which have proved extremely popular.

Both models still command high prices from customers, said Ivan Drury, an industry analyst at Edmunds.com, and bring new customers to brands formerly known for SUVs and smaller cars.

“I think those are the two products that are going to help them keep growing the market because they were slowing down,” he said, “but now, by adding this new mix of consumers, they are really changing the mindset.”

Hyundai and Kia also compete in market segments that many other automakers have abandoned. Both brands offer sedans like the Kia K5 and Hyundai Elantra, while some other automakers like Ford and GM have stopped making sedans for the North American market.

Kia also has a new SUV-like minivan model, the Carnival, which has replaced the Sedona minivan in the US. Kia’s minivan sales are up 90% last year.

Being two separate brands gives Kia and Hyundai some innate advantages over any single brand like Honda. That is, car buyers get more choice of models and dealerships.

Those who buy a compact sedan can choose a Honda Civic, Kia Hyundai Elantra or Kia Forte. Even with compact SUVs. With each brand offering a choice in this segment, Hyundai and Kia have a total of two opportunities to win it — the Hyundai Tucson and Kia Sportage — for Honda’s popular Honda CR-V.

Another factor that may have helped Hyundai and Kia was the general sense of economic unease in the country last year due to the coronavirus and related disruptions, Ton said.

Korean brands tend to do well when people are worried about money, she said, pointing to the brands’ strong performance during the 2008 recession. “They do very well because of their value proposition,” she said.

Both brands offer long warranties and, on a dollar-for-dollar basis, their cars tend to have a lot of features and options for the money, she said.

For shoppers watching their pennies, a Hyundai or Kia seems like a frugal purchase. It also helps that Korean brands have hired designers and engineers from German brands like BMW and Audi to help make their models attractive and enjoyable to drive, she said.

Many car buyers still associate Hyundai and Kia with this more negative corollary of “good value”. They are still seen by some as “cheap,” Drury said.

“If they don’t know what the brand is launching today in terms of product, their reaction is almost always negative,” he said. “And that’s perfect. They still have people to convert. They have a lot of room to grow.”

Randy Parker, vice president of sales for Hyundai Motor America, also credits the brand’s products for the sales growth, of course. But beyond that, he points to a major promotional push.

“We never took our foot off the gas from a promotional perspective,” he said. “We actually spent more money” in 2021 than we did in 2020.

In addition to direct advertising, Hyundai has also invested in a relationship with Disney and Marvel Studios, which has seen Hyundai vehicles appearing in advertisements such as Marvel’s Loki and Captain America and WandaVision’s Wanda.

Hyundai also made a deal with Amazon that now has all of Hyundai’s dealer inventory listed on Amazon.com.

“I’m not going to make predictions about the future and what our volume will look like,” Parker said. “All I can say is that our mindset is that we are looking to grow year after year and so far we have been able to do that in the last few years.”