KB News Desk
Carmakers look to hybrids, new models to keep sales momentum amid US tariffs and intensifying competition
South Korea’s five major automakers are on track to finalize their annual wage talks as soon as Monday, freeing them up to concentrate on expanding sales in the second half amid mounting pressure from US tariffs, intensifying competition with Chinese rivals and slowing global demand.
Hyundai Motor Co., the last of the five automakers to complete negotiations, is holding a union vote Monday on a tentative agreement reached last week. If approved, it would effectively bring this year’s wage and collective bargaining talks across the domestic auto industry to a close.
Under the tentative agreement, Hyundai Motor and its union agreed to a 100,000 won ($73) raise in monthly base pay, as well as a performance bonus equivalent to 400 percent of monthly salary plus an additional payment of 12.7 million won.
The deal came after months of contentious negotiations marked by repeated breakdowns and a series of strikes that led to production disruptions. The union staged its first full eight-hour strike in a decade accumulating a combined 60 strike hours this year, resulting in about 120 hours of production half across two shifts.
The walkouts have disrupted production of an estimated 55,200 vehicles, resulting in sales losses exceeding 2.3 trillion won, according to industry estimates.
Hyundai’s smaller sibling Kia, meanwhile, managed to reach a deal without resorting to strike action, in contrast to Hyundai.
Kia and its union are scheduled to formally sign its labor agreement Monday at its AutoLand Gwangmyeong plant in Gyeonggi Province.
Kia union members approved their tentative deal Friday, which includes a 100,000 won increase in monthly base pay and a performance and incentive package of 400 percent of monthly salary plus 12.7 million won.
The agreement allowed Kia to complete labor negotiations without a strike for a sixth consecutive year since 2021.
Renault Korea also approved its tentative labor agreement at a general employee meeting Wednesday. The deal includes a 51,000 won increase in monthly base pay and 2.5 million won in one-time payments.
GM Korea and KG Mobility already wrapped up their wage deal in July.
With labor talks mostly settled, Korean automakers are now shifting their focus to launching new models, diversifying their powertrain lineups, and tailoring strategies by region to boost profits and sales for the remainder of the year.
Hyundai Motor, which saw its operating profit drop 25.8 percent on-year in the first half, is planning to launch several key models, including an all-new Tucson and Tucson hybrid, as well as a GV80 hybrid, the first hybrid offering under its Genesis luxury brand.
The company is placing a major bet on hybrids, which have become an important source of profitability as demand for battery electric vehicles grows more slowly than anticipated.
Kia, on the back of record first-half vehicle sales, plans to maintain its momentum by tailoring its powertrain lineup to meet individual market demand.
In the US, Kia plans to ramp up production capacity for the Telluride SUV. In Europe, it plans local production of EV2 and EV4 electric vehicles, while expanding its hybrid lineup with models including the Seltos hybrid and K4 hybrid.
GM Korea, Renault Korea and KG Mobility are also expected to focus on increasing sales volumes and improving profitability in the second half.
The push comes as the global auto industry faces a challenging outlook.
“While demand is expected to grow in emerging markets including India and Russia, the auto industry is expected to see stagnant global demand overall amid slowing sales in the US and China, and higher tariff costs are rising oil prices,” said Choi Dong-won, an associate research fellow at the Korea Institute for Industrial Economics and Trade, in its second-half industry outlook report. “Growth in the global eco-friendly vehicle market is expected to see slower growth due to reduced policy support in major countries.”
Choi projected South Korea’s domestic auto market will shrink 1.5 percent in the second half on-year due to the expiration of a temporary consumption tax reduction and sluggish economic conditions.
For the full year, however, domestic auto sales are expected to rise 1 percent on stronger electric vehicle demand.
