With market shares going downhill in China, South Korean automakers are facing their "darkest hours" in the world's largest automobile market, insiders said.

Statistics from the China Association of Automobile Manufacturers show that by the end of July, the market share of South Korean automakers had dropped to 2.7 percent, down from 3.5 percent at the end of 2020.

Beijing Hyundai and Dongfeng Yueda Kia, the two producers of South Korean cars in the Chinese market, have experienced depressed sales.

In the first half of this year, Beijing Hyundai sold 194,100 vehicles, down 10.15 percent from a year earlier. Only 32,200 cars were sold in June, down 44.21 percent year-on-year.

The joint venture's double-digit sales decline is grim, compared with a 27 percent year-on-year sales growth in China's passenger car market in the first half of 2021.

Dongfeng Yueda Kia sold 79,800 cars in the first six months of this year, down 29.25 percent from the previous year. Only 14,000 vehicles were sold in June, down 37.01 percent year-on-year.

The sharp decline in sales of the two joint ventures has directly contributed to the downturn in market share of South Korean carmakers in China, according to insiders.

According to the CAAM, the market share of South Korean cars in China hovered low between January and June this year, and even dropped to 2.5 percent in February.

"South Korean carmakers rarely promote local research and development (in China), mostly importing existing models," said a senior expert in the industry.

"With the growth of Chinese automakers and the burgeoning innovation wave set off by Chinese car manufacturers represented by automobile startups, the South Korean automakers are unable to keep up with market changes," the expert added.

In terms of electrification, South Korean automakers are far behind Chinese brands, with delays in the launch of new energy models and without popular models to sell.

The failure to catch up with the rapid electrification of the Chinese market is also an important reason for the poor sales of South Korean vehicles and it will be difficult to catch up for some time to come, insiders said.

Hyundai has launched its luxury sub-brand Genesis with two models in China, in an effort to compete in the Chinese luxury car market.

However, considering the past development of the brand and the current competitive situation in that market, Hyundai faces a big challenge in reviving sales in the Chinese market with Genesis, experts said.

Kia has learned its lesson. The South Korean automaker launched the K5, positioned as a flagship sedan, in the second half of 2020, which just reached a sales of 542 in June. In the first half of 2021, fewer than 5,000 K5s were sold.

The decline in sales has been accompanied by a sharp fall in the number of dealerships. Data show that by the end of 2020, Beijing Hyundai had 700 dealerships. There will be further cuts this year and the number may eventually fall to 600, according to Fan Jingtao, deputy general manager of Beijing Hyundai.

Under the market pressure of continuous sales decline, it is inevitable for dealerships to withdraw from the marketing network. This will further aggravate the decline in sales, insiders said.