Hyundai Motor Spurs Drive in North America
By Ryu Jin
Staff Reporter
Hyundai Motor, the country’s top and the world’s sixth-largest automaker, has recently been taking up yet more aggressive strategies to fight the unfavorable business environment in North America such as the won’s rise and intensifying competition there.
In January, Hyundai Motor set a goal of selling one million vehicles in the North American region this year along with its affiliate Kia Motors, with the Sonata and Santa Fe and the newly released SUV (sport utility vehicle), Veracruz, as its main products.
Hyundai Motor and Kia plan to sell 621,500 and 432,000 cars this year, respectively, up 18.0 and 18.4 percent respectively from the previous year. In 2006, the Hyundai-Kia Automotive Group sold a combined 891,105, failing to achieve their 1-million target.
Aggressive Campaign
Hyundai-Kia Group’s ambitious plan to sell more than 1 million cars in the North American market this year is based on its strategy to improve the quality of its products, while waging other consumer-oriented activities there.
In particular, Hyundai Motor unveiled a series of new vehicles such as the Veracruz at the annual Detroit Motor Show earlier this year and now is also strengthening its public relations activities for sales promotion and consumer satisfaction.
Hyundai Motor, which sold some 53,600 vehicles at home in May to keep its 50-percent share of the domestic car market for the second consecutive month, also saw a 4.7-percent increase in exports, selling a total of 178,200 cars overseas, including 43,900 in the United States.
``Overseas sales have recently been bouncing back since the demand for new SUVs such as the Veracruz and Santa Fe has increased consistently in the North American market,’’ a company spokesman said.
Hyundai Motor has been a spectacular player in the mid-size SUV market, especially in North America, since the early 2000s. In fact, the company has sold more than 90,000 SUVs in Canada over the past seven years, including 23,630 in 2006 alone.
Now, with the advent of the new 2007 Veracruz crossover, which the company released in there last month, Hyundai Motor has a trio of models to tackle the fierce competition in the segment.
Hyundai Motor’s corporate relations officers explain that the new model shows a ``change in philosophy’’ of Hyundai, which is no longer content to just sell low-priced economy vehicles.
The Veracruz, with seven-passenger seating, standard all-wheel drive and leather seating surfaces, gives Hyundai a vehicle that is poised to go head-to-head with the class leaders.
Though designed in both California and South Korea, the Veracruz is explicitly for a North American audience. It is bigger, both inside and out, than many of its competitors, but visually it does not appear to be such a large vehicle compared with the Honda Pilot, Nissan Murano and Toyota Highlander.
Hyundai Motor has recently won kudos for its automobile quality and consumer satisfaction from American institutes, magazines and ordinary motorists, shaking off its image of being weak.
Leading car magazine Motor Trend praised the 2007 Veracruz in its July edition over Japan’s luxury SUV Lexus RX350. The Veracruz was rounded up as ranking first place in terms of design, interior, price and speed, beating out the Japanese crossover utility vehicle (CUV).
It was a challenge for the Lexus RX350, which had been the best on the quality list among all CUVs on the U.S. market. ``The Veracruz running on a five-speed transmission was faster than the six-speed powered RX350 and the Hyundai model performed smoother on rough surfaces,’’ the magazine wrote.
Last year, J. D. Power Initial Quality Study (IQS) rated the South Korean brand as having the best product quality among non-luxury brands _ ahead of Toyota, Honda and Nissan.
Hyundai Motor has also topped a survey of U.S. car owners for ``the best in auto quality’’ earlier this month for the first time since it began exporting cars to America in 1986. It took three top spots in the survey by the San Diego-based research firm Strategic Vision, beating out the world’s top automakers.
Hyundai’s Azera (Grandeur in South Korea), Entourage and Santa Fe were, respectively, selected as the leaders in the large car, minivan and small SUV categories. Kia Motors also led in two categories with the Sedona and Sorento taking the top places in the minivan and medium-sized SUVs categories.
In addition, Hyundai Motor was also selected as one of the multiple award winners for three of its brands _ the Grandeur, Santa Fe and Tucson _ in this year’s Vehicle Satisfaction Awards (VSA) by AutoPacific Inc., a noted automotive consulting firm.
``This means that U.S. drivers have begun to recognize Hyundai cars in terms of quality,’’ a Hyundai Motor spokesman said. ``We think our continuous efforts to improve the quality of our products led to the enhancement of the company’s brand value and consumer satisfaction in the United States.’’
New Chances, New Challenges
Company executives expect the free trade agreement (FTA) between South Korea and the U.S. will pose both advantages and disadvantages to the carmaker, though many experts say the South Korean automobile industry would be the top beneficiary of the deal.
While it is anticipated to widen the brand recognition in the U.S. and other neighboring nations including Canada and Mexico, the FTA is also expected to pose a threat to the domestic market by enabling Japanese carmakers to advance into the South Korean market with its cars produced on U.S. soil.
Hyundai Motor is changing its overseas strategy from one focusing on the small-size car market with price competitiveness to one expanding sales of mid- and large-size cars that promise more added value.
``Competition through price-cutting could inevitably have limits due to external variables such as the won’s strength,’’ a Hyundai Motor official said. ``What we need now is the reinforcement of the fundamental competitiveness based on improved quality and brand value.’’
Hyundai-Kia Automotive Group Chairman Chung Mong-koo said his group would brace for countermeasures to tackle the challenges ahead since the South Korea-U.S. FTA has both positive and negative aspects for its businesses.
``Toyota performed well in the North American market last year,’’ he said. ``But demand for Hyundai Motor and Kia cars has also been increasing recently.’’