Hold Off On Buying a New Kia or Hyundai
Been itching to get behind the wheel of a new Hyundai Tucson or a Kia Telluride? Exercise some patience. Uncertainty in new car sales at the end of 2020 and into 2021 means good deals for buyers might return.
Unfortunately, it’s going to be due to the COVID-19 pandemic still sweeping the country. It could lead to car companies like Kia and Hyundai return to the 8-year, 0% deals that were offered in the spring and summer.
Fitch Ratings, a leading provider of credit ratings, research and analysis for the global financial markets, has a negative outlook on Hyundai and Kia. The reason? “Recovery in profitability and cash flow may be delayed by uncertainty over the pandemic and earnings pressure from quality-related expenses and investments in new technology. This is despite their resilient performance since the start of the coronavirus pandemic,” says the latest Hyundai Fitch Rating report.
Risk of Lockdowns
The reporting company adds, “However, we believe the stronger-than-expected performance to date in major markets such as China and the US could be outweighed by the risks of additional lockdowns or restrictions that could delay a more significant recovery in auto demand.”
Now the key wording there is “risks of additional lockdowns or restrictions.” They haven’t happened yet but they could. If they don’t, demand should remain steady, which could affect availability. It’s a gamble, especially with ongoing supply issues related to the pandemic. You can’t build cars if you don’t have the parts.
Shutdowns, though, put pressure on car manufacturers to move the metal. It’s expensive for inventory to sit on dealer lots, even when interest rates are low. That’s when the incentives will start rolling out and you will pocket the savings. Keep an eye out for little money down offers combined with low or zero percent interest rates.
Good News For Hyundai
There is a silver lining in the cloud that is the Fitch Rating report. The agency sees “robust new product momentum and an improvement in product mix.” Hyundai, at least, has been on a new product juggernaut recently with the unveiling of the 2022 Hyundai Tucson, sneak peaks of the Elantra N model and design accolades for its Hyundai Prophecy.
Hyundai also has ambitious plans in the electric vehicle market. It plans to offer 10 Hyundai EVs by 2022.
Keith Griffin covers Hyundai and Kia at Torque News. He has been writing continuously about cars since 2002. Keith used to be a researcher/writer for US News & World Report, as well as numerous car sites, including Carfax and Car Gurus, and a contributor to The Boston Globe. Most recently, Keith was the managing editor for American Business Media. Follow Keith at @indepthauto on Twitter, on @LinkedIn and on his Indepth Auto Facebook page.