Hyundai Motor, Kia urged to focus on Europe, Southeast Asia

Hyundai Motor and Kia are advised to step up their strategic focus on Europe and Southeast Asia, as the Korean carmakers are feared to face harsher and less predictable trade barriers in the U.S. if former U.S. President Donald Trump wins the election later this year, experts said Monday.

The analysis came as battery firms and electric vehicle (EV) makers are the most vulnerable in the event of Trump’s reelection, as he threatens to abolish the Inflation Reduction Act (IRA) pushed by incumbent President Joe Biden.

The IRA is the mainstream policy enabling Korean EV firms to receive huge tax credits when using batteries with critical materials that have been extracted in the U.S. or other countries that have free trade agreements with the world’s largest economy.

At a Korea-U.S. trade forum hosted by the Korea Chamber of Commerce and Industry, experts voiced the dire need for local carmakers to be more flexible in diversifying their sales channels to other regions, so they can minimize possible repercussions from Trump’s possible return to power.

“If Trump seizes power again, this will deal a severe blow to the EV industry, so carmakers here are urged to focus more on EV-friendly marketplaces such as the European Union, or adopt a strategy of expanding production and sales for hybrid vehicles,” Park Joo-hyun, a partner at Yulchon, said during the forum.

Lee Ho-geun, an automotive engineering professor at Daedeok University, also underscored the importance for Korean carmakers to generate more sales in such regions as Europe, Southeast Asia and South America.

“The U.S. market comes with unpredictable political risks, so local carmakers need to expand their sales channels into stable markets — such as Europe — and others with huge growth potential — including India — and a group of other countries in Southeast Asia and South America,” Lee said.

But some other experts said Hyundai Motor and Kia should never take their focus off the U.S. market.

“Regardless of the results of the upcoming presidential election, the U.S. is undoubtedly the most important export partner for Hyundai Motor and Kia,” said Kim Pil-soo, an automotive technology professor at Daelim University College.

Both carmakers should keep pushing ahead with their ongoing two-track overseas strategy, under the two pillars focusing on the U.S. and other regions, as they can be more globally recognized only after being more widely recognized in the world’s largest economy, he said.