By Chris Haak
01.31.2008
Hyundai’s South Korean executives have had some ambitious sales goals in the US for several years. However, it has become apparent that either the bump in sales attributable to Hyundai’s improved quality and solid value message that occurred over in the earlier part of the decade has likely plateaued. Until this year, the company’s management in Korean didn’t quite grasp the idea that their expectations for continued breakneck sales growth in the most competitive automobile market in the world might have been unrealistic. The result was inevitably missed sales targets and a revolving door in the executive offices of Hyundai’s US subsidiary.
Last year, Hyundai hoped to sell 550,000 vehicles in the US. When it became apparent that goal wasn’t going to happen partway through 2007, the target was revised downward to 512,000. After the numbers were tallied in early January, Hyundai even missed that goal by a mile. In fact, it even missed the half a million milestone, with sales coming in at 467,009.
In 2007, Hyundai dealers primarily blamed the product mix – a shortage of the smallest, most fuel efficient models, the Accent and Elantra. This is being addressed for 2008 by increasing the supply of both models to the US by 25%. Additional dealer incentive programs are planned which will enhance dealer profit margins and encourage greater sales volume and customer satisfaction.
The product cadence will also continue at Hyundai for 2008. The big launch is the large Genesis sedan, with its optional V8 and rear wheel drive. The car will be uncharted territory for Hyundai, but at least that means that it is probably unlikely to cannibalize many sales of its sister models. However, I’m guessing that the Genesis will be more or less a niche product, in spite of how great it looks on paper. Customers just won’t be looking to Hyundai for an alternative to a Dodge Charger, Chrysler 300, Infiniti M35/45, or others. Another higher volume launch for 2008 is the five door Elantra Touring, which is intended to compete with the Toyota Matrix, Pontiac Vibe, and other stylish five-door compact hatches. Lastly, a revised Sonata sedan, with allegedly a much improved interior, arrives in the spring as an early 2009 model. Hyundai has been crowing about how the base Sonata’s interior will be superior in design and materials to the high-end Chevy Malibu LTZ’s, saying nothing for the base Malibu.
The goal for 2008 is 500,000 units. Hyundai has avoided some of the quality missteps that accompanied Toyota’s rapid growth, so they may be able to pull it off, but some dealers are concerned that the efforts to move upmarket to the Genesis may cost the company some volume, as Genesis development was done at the expense of more “bread and butter” models. If they can’t meet the goal, look for another “help wanted” sign again outside the executive offices of Hyundai USA later in the year.
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Nowhere near as delusional as VW, but Hyundai seems to believe that taking market share from someone else in a down market in 2008 in America is going to happen, “poof”, just like that. And that’s just not how it’s going to work.
I agree with this analysis of Hyundai’s fortunes in the USA. They may get a bump in 2008 as (e.g.) Toyota buyers trade down to a less-expensive car. But re Genesis: I think it was a big mistake to not spend the $$$ to launch Genesis in its own dealerships, as per Lexus or Infiniti. A Genesis buyer is already swimming upstream (friends will ask “You spent HOW much on a Hyundai?!”) and so need all the encouragement and hand-holding from the OEM they can get. Oriental rugs, soft lighting, espresso, Herman Miller furniture all combine to persuade the high-end buyer that he or she is indeed a valued customer doing the right thing by spending all this cash on a car. Sitting in a Hyundai dealership on a chair from OfficeMax listening to KROQ and buying Coke from the vending machine does NOT reassure the would-be Genesis buyer. Even if a person wanted to roll the dice on this car, would they want to walk past the Hyundai F&I cubicle, where some poor soul is sweating out loan approval on his Elantra? Shoulda gone with a new channel, I think.
Didn’t Mazda attempt the same kind of thing in the 1990s? Didn’t work for Mazda…
Whether it’s in the next five years or the nexy ten years, Hyundai is going to be breathing down several of the Japanese makers’ necks, and may pass Ford as well. Hyundai may be missing their sales goals but they’re still growing steadily and that growth is put a lot of pressure on the other car business competitors.
Hyundai might not even equal last year’s numbers!
HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HAH !!!!!!!!!
No more chance of this happening in 2008 than gas being 25 cents a gallon again.