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Hyundai and its stablemate Kia had almost no presence in the US car market five years ago. Hyundai and Kia now have 7.8% of monthly domestic sales, higher than Nissan, and have begun to approach Chrysler’s 8.6% share.

Hyundai’s cars are well-regarded and have started to replace Japanese models as the low-cost, high-quality products in the minds of many Americans.

Hyundai is a significant threat to Toyota (NYSE: TM), Nissan, Chrysler and VW, which has nearly no market share in the US. It competes in the value car market and mid-tier sports car sector. These are among Hyundai’s strong spots. VW has said its goal is to pass Toyota in worldwide sales. That cannot happen without a larger market share for its cars in the U.S.

Hyundai has become a viable alternative to a number of Toyota cars. Toyota’s market share has dropped from nearly 18% in late 2009 to about 15% this year, due primarily to damage done to its reputation by recalls. Hyundai’s Sonata competes with Toyota’s mid-tier sedans. Its Santa Fe is a challenger to Toyota’s lower end SUVs. Kia has a number of sedans and coupes aimed at the low end of the market once dominated by Toyota .

Nissan and Chrysler have the most to be concerned about as sales of the Hyundai line increase. Neither company has gained market share in the last year. Nissan has a limited line of mid-tier sedans, modestly priced sports coupes, and mid-level SUVs. Chrysler has the advantage of its strength in the minivan market and its Jeep franchise. Otherwise, the No. 3 US manufacturer has a modest line of coupes, sedans, and sports cars. Many of these compete directly with Hyundai products.

Nissan, VW, and Chrysler in particular have a problem if Hyundai’s unit sales continue to grow. Toyota, at least, has a model line-up and balance sheet to guard its US share.

Douglas A. McIntyre


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