Hyundai Automotive: Demand Prospects

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In the wake of the 2008 global financial crisis, industries across the globe suffered severely. The automotive industry was the second most affected industry in China after the housing and financing industry. The panic of the 2008 financial crisis led to a drop in the growth of domestic product of many countries. The global financial crisis and its subsequent recession affected Poland’s economy. The GDP of Poland dropped significantly from 6.8% in 2007 to 1.6% in 2013. China’s economy managed to withstand the crisis and the subsequent recession. This paper seeks to discuss the impact of the panic of 2008 as well as the subsequent recession on demand for the Hyundai automobiles in China and Poland.

At the end of 2006, the Poland’s ratings reached the high of eighties while the ratings of China hit the eighties but dropped significantly. Both ratings were moving toward the optimistic economic performance. By contrast, China’s ratings were dropping, and it was becoming evident that Poland was performing well. The GDP of Poland was performing better in comparison to China’s given the flourishing growth rate. At the time, the global financial recession had not set in. Many economies were thriving with a growth in domestic product. Comparing Poland to China’s economy at this time, Poland’s economy was healthier with many of its economic sectors thriving. It registered more demand for the Hyundai automobiles than China did. China registered a sale of 290, 011 Hyundai automobiles, a significant increase of 56343 in demand, resulting in an increase in its GDP (Barnett, Rhee, & Kim 17).

Table 1: 2006 Nielson’s ratings for China and Poland

 
The year 2007 witnessed a decrease in Neilson’s ratings from January to December for both countries. Both countries experienced a gradual decrease in the ratings from the beginning to the end of the year. Poland’s ratings decreased from 84.3 to 78.0 while China’s ratings decreased from 82.8 to 70.2. Poland’s GDP dropped more than that of China. The countries’ GDP performance was recorded at similar levels. The drop in Neilson’s ratings of both countries indicates that consumers were becoming anxious about prospects of business and employment. Beijing’s Hyundai had a decrease in demand of 58874 due to the country’s drop in GDP (Barnett, Rhee, & Kim 17).

Table 2: 2007 Nielson’s ratings for China and Poland

 
It is projected that the economy of China is likely to witness a fall in levels of unemployment while levels of business are projected to either remain unchanged or decrease. The optimism shows that consumers expect an increase in their income. It suggests that the GDP of the economy will increase. Poland did better economically than China, but in 2007, China overtook the Poland’s economy, as it enjoyed favorable economic conditions. With the stable economic circumstances, investors had faith investing in China than in the Poland given China’s economy was favorable (Barnett, Rhee & Kim 9).

The global financial recession hit the global market at the start of 2008. The Neilson’s ratings highlight the consequenc e of the panic with a significant drop for Poland. Poland’s ratings dropped from a 78.7 in January to 66.1 by the end of the year. China, on the other hand, had a rating of 69.3 in January and 81.9 in December that, implying a remarkable rise. Consumers in both China and Poland anticipated rise in unemployment levels, high rates of interest in the economy. Moreover, there was a decline in the performance of the automotive industry. There was a drop in GDP of Poland at the end of the year due to anticipation of the decline in the income levels as well as levels of investments. Inflation rates were projected to rise for Poland and Chinese economies, which would reduce the purchasing power of consumers in the two economies (Saee 22).

Table 3: 2008 Nielson’s ratings for China and Poland

 
China withstood the financial crisis. An important aspect that helped China withstand the economic recession was that the crisis occurred at a time when the Chinese market was competitive. The competition had been promoted by the government, which had advocated for an independent technologi cal development model. The model involved the use of joint ventures with global automakers. The implementation of the model implied that the Chinese partner offers the market and obtains the technology. China witnessed more demand for the Hyundai automobiles during the global financial crisis more than any other country (Saee 23).

In the year 2009, economies of both countries were still reeling with the impacts of the global financial recession. The respective governments had to establish ways to bail the economies from the downturn. The consumers, especially in Poland, were pessimistic over the unstable economic situations reflected by its average rating of 47.45, which w as below 50 (neutrality). It was the first time Poland’s economy had fallen to a pessimistic level. It began with a rating of 61.1 and ended the year at 46.9. The drop denotes a fall in the GDP of the country. In China, the consumers’ prospects declined until July and later began to rise steadily. Poland’s economy experienced a gradual fall from a rating of 61.1 to 46.9 at the end of the year. The fall indicates that the China’s economy was not hit by the decline compared to Poland’s economy. The consumer surveys indicate expectations of increased employment, reduction in interest, as well as inflation rates that led to increased investments. The demand for Hyundai automobiles in China increased, but the demand in Poland continued to decrease owing to the fall in GDP of the country (Maxwell & Drummond 8).

Table 4: 2009 Nielson’s ratings for China and Poland

 
The year 2010 is known as a period of economic recovery as nearly all economies established recovery mechanisms to restore their previous economic growth. Governments of several countries focused on helping their nations recover, with Hyundai Motors being bailed out. The purpose of bailing out was to aid companies get out of the financial crisis as well as to protect jobs. Alternatively, China moved towards achieving full recovery with its Nielson’s ratings increasing from 82.1 in January to 85.9 at the close of the year. As opposed to China, Poland’s economy was still under pressure, as its path to economic recovery proved challenging. Arguably, the move to bail companies out was necessary, but insufficient to stimulate the much-needed economic recovery as proven by the ratings table. Poland witnessed a constant rating of 46.9 as it had in December 2009 but it eventually fell to 25.4. It was a catastrophic decline in the economy of Poland, which led to a significant drop in the GDP. The demand for Hyundai automobiles in the country also dropped significantly as opposed to China that realized an increasing demand for the automobile owing to an increase in GDP (Maxwell &Drummond 10).

Table 5: 2010 Nielson’s ratings for China and Poland

 
Poland’s ratings continued to plummet and hit the lowest rating at 15.8 from February to May in 2011. China’s economy had less unstable economic conditions at the end of the year. It was because the country recovered from the recession partially. China’s ratings in this period indicate an economic recovery showing stable low interest rates, consistent GDP growth and reduced unemployment rates. Poland’s GDP continued to drop, a drop that had a correlation effect on the demand of the Hyundai automobiles. Poland’s demand reduced drastically compared to China’s demand for the same.

Table 6: 2011 Nielson’s ratings for China and Poland

 
In 2012, China’s economy continued to prosper as indicated by Nielson’s ratings. The growth indicates an increase in GDP, a reduction in unemployment, and the growth of demand for consumer goods. Nielson’s ratings for Poland continued to drop. Poland’s ratings had fallen to17.0 by January but rose to 20.4 at the end of the year. The rise was caused by interventions aimed at boosting the collapsing economy. The demand for Hyundai automobiles by Poland dropped due to the general decline in the GDP. China’s ratings dropped slightly from 86.6 to 85.2 leading to a drop in GDP and a substantial drop in the demand for the Hyundai automobiles (Lansbury, Suh, & Kwon 18).

Table 7: 2012 Nielson’s ratings for China and Poland

 
China’s economy hit the highest rating of 88.3 in December 2013. The high indicates optimality of consumers regarding the economic performance. With 2006 as the comparison year, the Chinese economy performed better in 2013. The ratings show that China’s GDP has increased, unemployment reduced and investments increased between the year 2006 and 2013. The economy has improved from the economic recession, depicted by the increasing viability of the country’s economy. Conversely, Poland’s economy performing dismally than it did in 2006. The recovery is slow and the country’s economy has not recovered from the global economic downturn (Lansbury, Suh, & Kwon 17). The economy continues to plummet with consumer confidence on the economy relatively low, as consumers remain skeptical (Lansbury, Suh, & Kwon 12).

Table 8: 2013 Nielson’s ratings for China and Poland

 
Conclusively, the analysis of the economies of the two countries using the GDP and the consumer index indicates that China’s demand for automobiles manufactured by Hundai is higher than Poland’s. China has recovered from the economic recession, whereas Poland has not recovered. Given the ratings, one would argue that China is an optimistic country while Poland is a pessimistic country. It is projected that Poland’s demand for the Hyundai automobile will continue to decrease due to a decline in its GDP while that of China will increase due to the continued rise of its GDP.

Works Cited

 
Barnett, William, Rhee, Mooweon. & Kim, Jae-Gu. “Hyundai Motor Company in China.” Stanford Graduate School of Business. 2008. 3 May 2013 <gsbapps.stanford.edu/cases/documents/IB91.pdf>.
Holweg, Matthias, Jianxi Luo, and Nick Oliver. The Past, Present, and Future of China’s automotive Industry: A Value Chain Perspective. International Journal of Technological Learning, Innovation and Development. 2(1): 76-118. 2009. Print.
Lansbury, Russell, Suh, Chung-Sok, and Kwon, Seung-Ho. The Global Korean Motor Industry. The Hyundai Motor Company’s Global Strategy. Routledge Advances in Korean Studies. London: Routledge, 2012. Print.
Maxwell, Gordan and Drummond, Stuart. Automotive Industry. Technical Challenges, Design Issues and Global Economic Crisis. Transportation Issue, Policies and R & D. New York: Nova Science, 2010. Print.
Saee, John. China and the Global Economy in the 21st Century. Routledge Studies in the Growth Economies of Asia. London: Routledge. 2011. Print.