Korea's Hyundai Inflates Monthly Sales Results

Seoul March 6, 2006; Kim So hyun writing for the Korea Herald reported that Hyundai Motor Co. pushes unsold cars out of factories to inflate its monthly results, making them sit in parking lots before actual delivery to customers, industry sources said yesterday.

As domestic automakers' monthly sales reports are made according to the number of new car releases from factories, Hyundai passes on unsold vehicles to its agents at the end of each month to meet its target of commanding half the market.

Less popular Hyundai vehicles such as the Click, Verna and Tucson showed a sharp increase in their sales volume towards the end of the month.

Hyundai said it sold 322 Click cars in the 20 days to Feb. 20 and sold 372 cars in the last week of the month. Hyundai also sold more Verna cars in the last week of February (678 units) than during the first three weeks (662 units). Sales of the Tucson reached 1,455 units as of Feb. 20 and 1,419 more were sold in the following week.

As for popular models such as the Sonata and Grandeur, sales as of Feb. 20 took up more than 60 percent of the total monthly volume. Some 4,208 Grandeurs were sold as of Feb. 20 and 2,566 more were sold between Feb. 21 and 28.

"It is usually the less popular models that are pushed out to agents," said a Hyundai Motor agent who requested to remain anonymous.

"At least 10 percent of the sales reported by each sales agent are cars that haven't been ordered yet."

The situation is worse for Hyundai's affiliate Kia Motors Corp. which is suffering from stagnant domestic sales. Kia's data shows that sales of the Carnival, Sportage, Lotze and Cerato in the last week of February covered 52.1 percent, 51.1 percent, 47.1 percent and 48.9 percent of the month's totals, respectively.

"Agents that have not met the monthly target set by the headquarters receive unsold cars at the end of each month," said a Kia agent who also wished to remain anonymous.

As for GM Daewoo Auto & Technology Co., Renault Samsung Motors Co. and Ssangyong Motor Co., sales volume as of Feb. 20 accounted for 59.4 percent, 58 percent and 58.3 percent, respectively, of the monthly total. However, the figures were 55 percent for Hyundai and 51.2 percent for Kia.

Pre released cars are mostly left in large parking lots around the city as the agents don't have the space to keep them.

"These cars can't be the same as those that have just been released," said a Hyundai agent.

"A discount is usually given for cars that have been released a long time ago, but not necessarily if the customer doesn't realize it."

The Korea Automobile Manufacturers Association said this habitual practice of automakers will be reduced if the monthly reports are made according to the number of new registrations which involves acquisition and registration taxes.