Hyundai Motor Co. and Kia Motors Corp. are losing ground in China in the face of stiff competition from homegrown rivals armed with relatively cheap prices and improved product quality, industry data showed Thursday.

The two South Korean auto giants saw their combined market share in China drop to a single digit, which points to challenges that they are facing in major overseas markets this year.

According to the data provided by a local automobile association, Hyundai Motor sold a cumulative 724,705 cars in the world's largest car market during the January-September period of this year.

The amount was the sixth-largest among carmakers doing business there, which was down from the previous fifth position. Hyundai Motor was outperformed by Changan Automobile, which sold 809,397 units during the cited period.

This marked the first time since 2009 that Hyundai Motor has lost to a Chinese local brand in terms of sales.

Kia Motors, South Korea's second-ranked carmaker, also saw their ranking in China slide to 15th from last year's 10th by selling 395,771 cars during the nine-month period. Chinese rivals, in contrast, gained ground with Great Wall Motor joining the top 10 list.

Hyundai Motor and Kia Motors sold a combined 1,127,361 cars until September in China, down 11.4 percent from a year earlier.

Their combined market share in China also dropped to 8.8 percent from 10.5 percent tallied the year before.

Chinese brands, meanwhile, commanded 40.9 percent of the market, a 3.3 percent rise from a year earlier.

Their marked setbacks in China underscore the enhanced competitiveness of local brands in China which appeal to customers with relatively cheap price tags and much improved product quality, analysts said.

They also demonstrate the challenge that the two automakers are facing in global markets at a time when they are struggling to achieve their annual car sales target of 8.2 million units for this year.

Some experts cautiously say that things will improve for the two Korean carmakers in China down the road, as their recent price cuts and launch of new models will likely pay off, possibly keeping alive the recovery trend seen last month.

In September, their combined sales in China shrank 11 percent, compared with a 26.6 percent plunge registered in the previous month. (Yonhap)