Global Automotive Technology :: A Complete B2B Portal for Automotive Industry | Best Media Portal for Automotive Industry | A Hub of Suppliers and Manufacturers for Automotive Sector

Hyundai Motor America has used a combination of new product and aggressive marketing to out-perform almost all its rivals in the U.S. market in the first six months of the year, based on sales data from Autodata Inc. However, the brand is not following the same path its Japanese competitors followed as they gained ground in the U.S. market.
Advertisement

The Hyundai brand gained credibility and respect approaching that of its larger Japanese competitors when its Genesis luxury sedan was named Car of the Year at the 2009 North American International Auto Show.

Hyundai then met the economic downturn head-on with its innovative Hyundai Assurance program that allows customers to return their vehicles without penalty if the customer loses his job. GM and Ford quickly matched this incentive, which illustrated Hyundai’s increasing clout in the market and the ingenuity of the incentive itself. In June, Hyundai offered customers the option of receiving incentive money in monthly payments, in one lump sum or as a reduction to the transaction price of the new vehicle.

The brand also got a boost when it placed fourth among 37 brands in the 2009 J.D. Power and Associates Initial Quality Study, beating Toyota and Honda.

These awards and marketing actions paid off. Hyundai’s January-June sales declined 11.4% versus the prior year, less than a third of the industry’s decline of 35.1% and the third lowest decline in the industry after Subaru and Kia. During the same time period Hyundai captured 4.3% of the U.S. new light vehicle market, up 1.2 percentage points from a year ago. This share gain was the largest of any brand in the industry. As of June 1, Hyundai’s days supply was 52 days versus the industry at 67, according to Automotive News. Only Toyota, at 41 days, had a lower result among the mainstream nameplates.

Hyundai had a relatively strong June, with sales of 37,943 units to outpace Dodge and rank sixth among all brands. Hyundai dealers delivered 8,139 Accents in June, 18% more than a year ago and 1,200 more than any other subcompact.

Nevertheless, Hyundai has achieved these results via a different avenue than that pursued by Honda and Toyota in at least two respects. While these two Japanese automakers generally have shunned fleet sales, Hyundai has moved aggressively into fleet. In the first quarter of 2009, 34% of Hyundai sales were to fleet buyers, a higher fleet penetration than that of any of its domestic or Asian rivals, according to Automotive News (Chevrolet data and second quarter data are not available as of this blog entry). Over the long term, this substantial fleet business will put downward pressure on residuals.

Secondly, Honda, Toyota and Nissan early on established separate distribution channels for their luxury vehicles. This strategy enabled these companies to more efficiently target both luxury and non-luxury customers, to create distinct images for each of their brands, and to bring to market product portfolios consistent with those brand images. Hyundai, in contrast, currently offers a product portfolio ranging in price from $9,970 for a base Accent to $43,000 for the Genesis. This range will get larger when Hyundai starts selling the high-end Equus, which reportedly is expected to sell at a transaction price between $50,000 and $60,000.

It is questionable whether, in the long term, these two strategies being pursued by Hyundai will be in the best interests of the brand.

Comments

RSS

All rights reserved."