SEOUL, Nov. 1 (Korea Bizwire) – Hyundai Motor Co. and its corporate cousin Kia Motors spent more on sales promotions and incentives this year than in 2014 as they fight for market share with Japanese rivals, which are benefiting from the weak yen, a corporate report by the carmakers showed Sunday.
According to the investor relations (IR) report, the two companies, which are the flagships of Hyundai Motor Group, the world’s fifth-largest automotive conglomerate, used 14.13 trillion won (US$12.41 billion) on various sales promotion programs and incentives to attract customers in the first nine months of 2015. This represents a gain of 4.2 percent from the 13.56 trillion won used in January-September of 2014.
Hyundai, South Korea’s No. 1 carmaker, said it spent a little under 8.7 trillion won, with Kia’s outlays hitting 5.43 trillion won.
The companies said the rise is due to efforts to counter Japanese carmakers, which have taken full advantage of their weaker currency to entice consumers to their show windows. This is making it harder for others to compete, particularly in overseas markets unless incentives are given.
“The money was primarily used to counter the very aggressive marketing drive shown by Japanese rivals,” a senior Hyundai official stressed.
Sales promotions and incentives refers to so-called givebacks and perks, including cash refunds, low-interest financing for people who purchase cars and special leases, designed to get customers to open their pockets.
On the other hand, the automakers said they actually spent 0.4 percent less on marketing costs, such as advertising, in the same nine-month period compared with the year before.
The companies said they spent a combined 3.83 trillion won, down from 3.84 trillion won the year before. Of the total, Hyundai spent 2.14 trillion won, with Kia using just under 1.69 trillion won.
Hyundai and Kia have been trimming back on marketing spending, which peaked at 5.54 trillion won in 2012. This fell to 5.11 trillion won in 2013 and 5.06 trillion won last year.
“The steady drop reflects the overall rise in the Hyundai and Kia brand images in the global market that is making it possible to spend less on advertising,” a local industry source said. “This permits more money to be used in other areas that can raise the overall competitiveness of the companies.”
The analyst pointed out that according to the latest report by Interbrand, a renowned international brand consulting firm, Hyundai ranked 39th among the top 100 global brands, with Kia finishing in 74th place.’