[Editorial] Chinese Cars Upend Global Markets; We, Too, Must Take Decisive Action

Hyundai Motor Company and Kia are performing well in Europe's small electric vehicle market. From January to August this year, their sales totaled 97,689 vehicles, up 14.4% from the same period last year. The Hyundai Inster, Kia EV3 and EV2 led the gains. This is welcome news at a time when overseas results have been lackluster, with Hyundai Motor Company's overseas sales down 13.9% last September. But the challenges are formidable. Hyundai Motor Company and Kia's cumulative sales across Europe through August fell 2.2%. A clear-eyed market analysis and a joint response strategy involving the public and private sectors are needed.
The global auto market is being reshaped rapidly as Chinese automakers mount a fierce challenge. Over the same period, sales of China's BYD in the European Union (EU) surged 163%, while those of Chery Automobile skyrocketed by 251%. As many as 20 Chinese brands took part in the Paris Motor Show, which ended on the 18th—twice the number that attended two years ago. Europe's auto market is turning into a battleground for Chinese automakers.
Chinese automakers' competitive edge no longer rests solely on low prices. Battery and charging technologies are also advancing rapidly. BYD recently announced that its second-generation Blade Battery, unveiled last March, took nine minutes in the company's own tests to charge from 10% to 97%. The result came with the caveat that it required a dedicated charger capable of delivering up to 1,500 kW, but the pace of technological progress is remarkable. Beyond small electric vehicles and hybrids, BYD is setting its sights on Europe's luxury car market, including BMW and Mercedes-Benz, with driver-assistance technology for urban driving. The days of dismissing Chinese cars as cheap vehicles are over.
Europe's traditional automotive powerhouses are now on high alert. Volkswagen CEO Oliver Blume, whose company is Europe's largest automaker, said at an event related to the Paris Motor Show last week that Europe's mass-market auto industry was under enormous pressure. Volkswagen has embarked on a major restructuring amid weak sales and the burden of the costs of shifting to electric vehicles. Stellantis and Renault are also accelerating development of affordable electric vehicles in response to Chinese automakers' low-price push.
This is also the backdrop to the EU's move to raise barriers to protect its auto industry. After imposing additional tariffs of up to 35.3% on electric vehicles made in China, the EU recently reached an agreement with China to limit imports of hybrid cars to around 350,000 a year. Last week, France and Germany also agreed to pursue a “Made in Europe” policy favoring cars and parts produced within the bloc.
This is no distant concern for us, either. BYD sold more than 20,000 vehicles in South Korea through September this year, placing fourth in imported-car sales in September. Other Chinese brands are also entering the market one after another. The government should closely scrutinize unfair subsidies and the possibility of dumping, and strengthen battery safety and quality inspections. But protectionist barriers alone cannot safeguard the domestic auto industry. Industrial policies to support the development of affordable electric vehicles and battery technology are urgently needed. South Korea must also engage actively in trade negotiations to ensure its companies are not disadvantaged by the EU's policy favoring production within the bloc.
The way forward for Hyundai Motor Company and Kia ultimately lies in technological prowess and localization. Kia is making the EV2 in Slovakia, while Hyundai Motor Company is producing the Europe-specific IONIQ 3 in Türkiye. Developing small electric vehicles tailored to European consumers' tastes and expanding local production are steps in the right direction. But moving production sites alone is not enough. The companies must strengthen battery and parts supply chains and accelerate software innovation. Automobiles are one of South Korea's flagship industries, having demonstrated formidable resilience and supported the country's exports during the previous semiconductor downturn. The government, too, must spare no effort in supporting automakers' overseas expansion and technological competitiveness.