Higher incentives drove Hyundai Group to achieve 1% US sales gain in April 2015

Article by Christian Andrei, on May 7, 2015

Hyundai Motor Group exceeded analysts’ expectations by posting a 1% increase in U.S. sales for April 2015 – a feat it accomplished by offering bigger incentives for the Hyundai and Kia brands. Hyundai Motor America reported a 3% increase in sales to 68,009 units – breaking April records. Meanwhile, Kia Motors America posted a 1% decrease from the record set last year with 53,282 units sold.

Nevertheless, it’s still its second-best sales for April. In a statement, Bob Pradzinski, vice president of sales at Hyundai’s U.S. sales arm, said that it has set records for April six years straight as it enters the spring selling season. He said that this momentum is expected to continue with the launch this spring of the hybrid and plug-in hybrid versions of the Sonata midsize sedan.

However, Hyundai posted these gains at a cost. Last month, Hyundai spent $2,710 for each car on incentives, about 48% higher than April last year, according to TrueCar Inc. Kia also increased its incentives per car by 26% to $2,758. Throughout the industry, per-car incentives had only risen by 1% in April as carmakers like Ford and GM limited their expenses and benefit from the expanding market for trucks and crossovers.

TrueCar also indicated that several companies spent higher than Hyundai and Kia when it comes to the dollar value but no one spent more for each dollar of sales. The incentives of Hyundai as a share of transaction prices increased to 11.5% while Kia's climbed to 11.6%.

Chrysler, which had a ratio of 10.5%, was the only other car company that recorded double digits. But it appears that Hyundai and Kia’s April 2015 results show that it is gaining some success with its more expensive cars that have a higher profit margin.

April sales of the Hyundai Genesis luxury sedan totalled 3,159 units, a 142% increase. Since its redesign last year, it has held a starting price of $38,950.

Kia’s redesigned Sorento crossover reported a 15% increase in sales to 9,808 units while it sold 3,394 units of the Sedona minivan, marking a fourfold increase.

Nevertheless, all these gains failed to offset the declines of the brand’s cars. In April, Kia only sold 11,418 units of the Soul subcompact, a 21% decline. This ranks second among Kia's most popular models. The Optima midsize sedan is at the top.

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