Problem? What problem? Why Hyundai isn't worried about its sales despite getting beaten by Kia and Ford in 2023

At the end of 2022 we wrote a story with the headline, 'Why Hyundai doesn't want to finish fifth in sales in 2023' - guess where Hyundai finished in sales in 2023?

Yep, that's right, fifth place. It means the brand has suffered two consecutive years of finishing in fifth place on the Australian sales charts. In 2022 it was bettered by both Mitsubishi and its sister brand Kia after struggling with supply issues, but there was optimism that it would be turnaround in 2023.

So, what happened? Is this the beginning of the end for Hyundai? Or can the brand bounce back in 2024?

Now, I could sit here and write a sensationalised take that suggests Hyundai is in decline because it has moved away from its value-led philosophy and the affordable small cars that made it successful in the first place. I could tell you that it's under threat from new brands, like MG, Haval and Chery, that are attracting more and more buyers every year.

But that wouldn't really be telling the whole story, and arguably the whole truth. That's because a closer analysis of the sales beyond just its position on the final charts reveals there are several small but significant reasons for the final result, and none should cause a panic inside Hyundai HQ.

For starters, finishing in the top five in sales is hardly a bad result. It's just we had become accustomed to the brand selling more (often nudging six-digits) and being firmly entrenched as a top-three brand, behind Toyota and Mazda. So any analysis of the brand's most recent performance needs to be viewed through that level of previous expectation.

But while the company may have slipped a few places on the sales charts, Hyundai enjoyed 2.5 per cent sales growth in '23, selling 75,183 new vehicles, which is more than it did in '22, '21 and '20.

At the same time it leap-frogged Mitsubishi, which suffered a 17.5 per cent decline, and dramatically closed the gap to Kia. The sibling rivalry between Hyundai and Kia Australia appears respectful, but there's a clear hierarchy inside the parent company; which is called Hyundai Motor Group for a reason.

So when Kia bested its older sibling by nearly 5000 sales in '22 (4985 to be precise) it was certain to have at least ruffled some feathers in Hyundai Australia's head office. While the fact Kia declined by 2.8 per cent in '23 won't be celebrated by Hyundai, it won't have gone unnoticed that the gap between the two brands shrunk to just 937 sales.

This was despite some key models still suffering supply constraints, such as the Staria and Staria-Load vans, the Venue small SUV and the ageing i30 range. Even more critical for Hyundai is 2023 was a change-over year for the Kona, with the outgoing model effectively on run-out and limited supply in the first half of the year, which goes a long way to explaining its 3.1 per cent sales drop.

A full year of the Kona will undoubtedly help Hyundai's overall numbers, as will the refreshed i30 and Tucson ranges (the latter of which will add a much-needed hybrid variant) as well as the likely arrival of the new-generation Santa Fe. Plus there's the Ioniq 5 N and Ioniq 7 large electric SUV that will add some 'wow factor' and incremental sales.

On top of all this you need to remember that Hyundai is now selling a much more premium mix of models – still offering good value but at a higher price (and therefore higher profit) than its biggest-selling years. The higher-grade N Line trim has become popular across most models (accounting for more than 25 per cent of those sales), which is ultimately a better business model for the company.

The other problem Hyundai ran into in '23 was the same one Toyota did - the overwhelming popularity of the Ford Ranger. The Blue Oval was up more than 30 per cent last year on the back of the flood of Ranger sales, jumping to third place in the final sales record.

Then there's the really good news story for the company that's hiding in plain sight - the success of Kia Australia is nothing but good news for Hyundai Motor Group as a whole. When you combined the '23 sales of both brands they tallied more than 150,000 vehicles, making the Group the second best-selling brand behind Toyota and more than 50,000 ahead of Mazda.

So even if Hyundai finishes fifth again in 2024 it may not be bad news. With steady sales of a premium model mix and a range of refreshed models, the ingredients are there for another strong performance that cements Hyundai as one of the country's favourite car brands.