Daily Archives: April 2, 2007

Hyundai Sees Luxury Brand in Its Future

Hyundai Sees Luxury Brand in Its Future

LA JOLLA, CA – Hyundai Motor America Inc. may consider establishing a luxury brand, a top executive tells Ward’s.

“We’d probably be silly not to look at it,” Wayne Killen, director-product planning, says here during a test drive of the all-new Hyundai Veracruz cross/utility vehicle. “The case could be made that it makes sense for us.”

Hyundai already has “cut its teeth” in the fierce U.S. market by competing head-to-head with U.S., Japanese and European brands – and succeeding, Killen claims.

Hyundai’s share of the U.S. market grew last year by 0.1 percentage points to 2.8%, compared with 2005. However, sales this year were down 3.1% through February, tracking below the industry’s 2.5% decline.

Additionally, the U.S. market is expected to begin seeing Chinese-built small cars, which are bound to be inexpensive and potentially could cut into Hyundai’s value-oriented market segment, Killen says.

“We need to have an option for those customers who want to trade up from their current Hyundai to a more expensive vehicle.”

ut Kille’s conceptual interest should not be interpreted as an official corporate initiative to mimic Japan’s top three auto makers, all of which have been building luxury brands in the U.S. for more than a decade.

At a press conference here Thursday, a journalist asked John Krafcik, Hyundai’s vice president-product development and strategic planning, whether the auto maker is considering a luxury outlet. Krafcik says there have been no such discussions at Hyundai.

And yet, HMA officials, including Krafcik, have made it clear Hyundai needs to move upmarket and appeal to a more affluent customer base.

At next week’s New York auto show, Hyundai will unveil Concept Genesis, a rear-wheel-drive V-8 powered sedan (codenamed BH) that is the same size as the Dynasty sold in South Korea. RWD cars with V-8s have been prevalent in the luxury segment.

In his presentation here, Krafcik says Concept Genesis has a firmer chassis than a BMW 5-Series and is proof that Hyundai can appeal to a market that wants more than reliable transportation and a good value.

“We want to extend to more segments but not leave behind the entry-level buyer,” Krafcik tells journalists.

The RWD sedan will go on sale in second-half 2008, he says. “We think this car will be fully equal to the best European sedans,” Krafcik says, adding the challenge is instilling that message in the minds of consumers.

Pricing for the new sedan will begin under $30,000, which represents the top end of the range for the front-wheel-drive Hyundai Azera sedan.

Ward’s segmentation identifies the Azera as an upper middle car, competing with the Buick LaCrosse, Honda Accord, Chrysler Sebring, Mazda6, Mercury Milan, Nissan Altima and Toyota Camry.

Killen sees the production version of the Concept Genesis competing with the Chrysler 300C and Lexus GS 350.

Is Hyundai ready to sell a $50,000 car? “Maybe not today, but we’re not far from it,” he says. “With Genesis and the Veracruz paving the way, that could be in our future.”

Pricing for the new front-wheel-drive Veracruz, derived from the Santa Fe CUV architecture, begins at $26,995 and tops out at $38,000, with saddle leather interior, all-wheel drive and DVD player.

Primary competitors for the Veracruz are the Honda Pilot, Toyota Highlander and Subaru B9 Tribeca. But a secondary competitor is the Lexus RX 350.

For comparison purposes, journalists here were offered a chance to drive the RX 350 back-to-back against the Veracruz.

In a series of clever new TV commercials, Hyundai proudly proclaims its vehicles match up favorably with nameplates from Lexus, BMW and Land Rover and cost a lot less.

By Tom Murphy
WardsAuto.com, Mar 30, 2007 11:09 AM

Hyundai Offers A Little Bigger Crossover With Its Veracruz

Hyundai offers a little bigger crossover with its Veracruz

First Look

The 2007 Hyundai Veracruz, introduced earlier this year at the North American International Auto Show in Detroit, is now in dealer showrooms.

2007 Hyundai Veracruz SE

  • Base price: $28,005
  • Price as tested: $33,170
  • Drivetrain: Front engine, front drive
  • Engine: 3.8-liter V-6
  • Horsepower: 260
  • MPG: 18 city, 25 highway
  • Curb weight: 4,266 pounds
  • Built: Ulsan, South Korea

It’s a bigger crossover than the automaker’s Santa Fe, with a larger 3.8-liter V-6 engine.

The Veracruz, at 15.9 feet long, is 6.5 inches longer than the Santa Fe. It’s also an inch taller and 2.2 inches wider.

The Veracruz comes in three trim levels: The entry-level GLS, the mid-range SE and the luxury Limited. All-wheel-drive is available in all three trim levels.

I took a front-drive SE for a quick drive. Its ride and handling compare to other high-end mid-size crossover vehicles.

The 260-horse engine gives it good acceleration, and the six-speed automatic gets the most from that available power. The Veracruz is available with Hyundai’s Shifttronic manual control, which lets the driver manually shift the transmission up or down one gear, within limits.

Upgrades on the SE include 18-inch wheels, leather-wrapped steering wheel, automatic headlights and a center console that can be cooled.

The model I drove had the optional leather interior, part of a package that added $3,350 to the sticker. The seats are comfortable, and the high seating position gives a good view of the road. The seats are heated – a nice feature to add with leather seats in Michigan. The package also includes a backup warning system.

The Veracruz seats seven in three rows, and the second row is divided. The seat back on each side can be folded, or with a one-hand control, the seat back flips forward and the whole seat slides forward to allow access to the third-row seats.

XM Radio is standard on all Veracruz models, along with rear-seat climate controls, electronic stability control and traction control systems.

One nifty feature is a mood light – a soft, blue-toned light placed between the interior lights in front of the sunroof. Just the thing when you need a little light, but don’t want to blast your night vision with one those bright white lights.

The Veracruz is made in South Korea; 84 percent of the parts are from Korea, 6 percent from the U.S. and Canada, with transmission parts from Japan.

Sunday, April 01, 2007
By James M. Miller

Powerful Car May Catapult Hyundai

Powerful car may catapult Hyundai

Keep an eye on Hyundai’s stand at the New York auto show this week.

The South Korean automaker has a rare chance to re-create its image. Hyundai could vault from selling largely on the strength of low prices and long warranties to becoming a desirable brand that competes with performance and technology.

The car to watch is the Genesis, a rear-wheel-drive concept sedan that’s a thinly veiled version of a production model coming next year.

If you want to build a credible, big, powerful car — anything more than a Honda Accord, Ford Fusion or Saturn Aura — rear-wheel-drive is vital. Along with all-wheel-drive, it’s the only way to get the most performance out of upper midsize cars because running too much horsepower and torque through the front wheels affects steering and handling.

The car’s weight also tends to be more evenly distributed over its entire length, and the long-nosed proportions of rear-drive cars lend themselves to striking designs.

How big an impact could the Genesis have on Hyundai?

Think Chrysler 300. Great design, good price and rear-wheel-drive coalesced to create a car that catapulted Chrysler from minivan maker to award-winning star of rap videos.

The Genesis features a 4.6-liter, 32-valve V8 engine that Hyundai says produces more than 300 horsepower. There’s a six-speed automatic transmission from German drivetrain expert ZF.

Hyundai will reportedly also offer two V6s in the production model.

Assuming Hyundai launches the car with good quality — a safe bet, given its recent track record — it must get two other points right to cash in on the new model’s possibilities: price and dynamics.

Dynamics come from engineering skill and executive decisions. Hyundai’s engineers can probably create a car with competitive ride and handling if the suits in the corner offices let them.

Big rear-drive cars like this are limos in South Korea, and Hyundai executives have already inflicted a soft ride and squishy handling on the brand’s other sedans.

The brand’s other big sedan, the front-wheel-drive Azera, may determine the new car’s pricing.

That could be a problem. Hyundai executives reportedly worry the new car will steal sales from the Azera unless it’s priced above the existing car, which typically sells for around $26,000, according to Edmunds.com.

Saddling the new car with an inflated price — $28,000 or more for a V6 model, according to people who should know — would be a mistake.

If Hyundai wants to become a prestige brand — and it does — it can’t hamstring its most promising new car to protect a model that represents the company’s past.

April 1, 2007
BY Mark Phelan Detroit Free Press
Free Press Columnist

Hyundai’s Mission Possible: Beat the Luxury Brands

Hyundai’s Mission Possible: Beat the Luxury Brands

LA JOLLA, Calif. The event was billed as a new- product introduction, but it turned out to be a soul-searching session. Hyundai, which entered the United States in 1986 as a corporate infant, is growing up. And growing up isn’t easy.

he early years for Hyundai Motor America were downright painful, with the company made the butt of numerous jokes. The reason was the abysmal quality of Hyundai’s first U.S. offering, the subcompact Hyundai Excel. One joke, from late-night talk show host David Letterman, went like this: Want to frighten astronauts in space? Place a Hyundai logo on the spacecraft’s control panel.

Automotive journalists were equally merciless. There was the standard auto writer’s quip: “Hey,” one journalist asked another, “did you know that the Excel has a fully independent suspension system?” The straight man shook his head. “Well, it does,” said the joker. “The front end goes one way, the rear end goes another.”

Steve Wilhite, chief operating officer of Hyundai Motor America, who last week was here for the introduction of the 2007 Hyundai Veracruz crossover utility vehicle, suppressed a grin at the retelling of those barbs.

“Yeah,” Wilhite said in an interview, “that was a rough start.”

But that was then. This is now.

Hyundai Motor America is part of the Hyundai Kia Automotive Group, the largest car company in South Korea. With combined global sales of 3.7 million vehicles in 2005, a number it is likely to have matched or slightly surpassed when all of the figures are in for 2006, Hyundai Kia Automotive is now the sixth-largest car company in the world, ahead of Japanese rivals Nissan and Honda.

From 2001 to 2005 in the United States, as Hyundai’s reputation for product quality increased, aided by a 10-year/100,000-mile warranty on Hyundai engines and transmissions, Hyundai Motor America’s sales rose an average of 14 percent annually.

But that hot sales pace cooled considerably in 2006. In the United States, for example, Hyundai sold 455,520 vehicles last year, a scant 0.1 percent more than the 455,012 it sold in America in 2005.

That slowdown came partly for reasons completely out of Hyundai Motor America’s control. Chung Mong Koo, the chairman of parent Hyundai, was convicted in February of embezzling the U.S. equivalent of $73.8 million from the company. He was sentenced to three years in jail, but is now free on appeal.

Chung’s legal problems have cast a pall over the company, including its U.S. operations. All major Hyundai decisions, including those governing Hyundai Motor America, run through Chung. When he was arrested last year, the company delayed decisions on several new plants and other key product development strategies.

No Hyundai official here, of course, would comment on Chung’s case or its impact on U.S. operations. Instead, Wilhite and his assistants preferred concentrating on Hyundai’s U.S.-generated problems as it looks for future growth.

“It is not that we don’t know who we are,” said Wilhite. “The problem is that not many people outside of the company know who we are. We haven’t done a good job of telling our story.”

Wilhite said most people in the United States see Hyundai as a small South Korean company dedicated to making small, inexpensive cars. “We’re seen as a ‘value’ car company,” said Wilhite, using the auto industry’s favorite euphemism for “cheap.”

“Value” will remain a “critical part” of Hyundai’s automotive mission, said John Krafcik, Hyundai Motor America’s vice president for product development and product planning. “But we also need to be represented in the upscale segments” of the U.S. automotive market, Krafcik said.

How can Hyundai go upscale without chasing away “value” customers and without being labeled a luxury “wannabe”?

Wilhite and his team are crafting an audacious, exceedingly risky plan.

Bolstered by an incredible No. 3 ranking on J.D. Power and Associates’ overall product quality list, putting Hyundai just behind Porsche and Lexus, Hyundai is now implementing a strategy of building better passenger vehicles than any of its European or Asian rivals and selling them at substantially lower prices.

Hyundai also will challenge the German myth of engineering superiority, mostly by developing and touting “better” engines, transmissions and safety features, such as electronic stability control, a crash-avoidance device currently installed in 73 percent of all Hyundai vehicles sold in the United States.

But taking on the Europeans and the Japanese, and a resurgent General Motors in America, is a very, very tall order. Getting American consumers to believe that the once-meek Hyundai brand can trump that crowd is complicated by Hyundai’s need to avoid any appearance of arrogance, or of indifference to its original budget-minded customer base.

And another problem: Hyundai has 755 dealers in the United States, many of whom have grown up selling “value” and dealing with subprime-credit customers. Getting those dealers on board in the race for upscale clients could prove a daunting task. Some might refuse to cooperate, which means Hyundai will have to move to disenfranchise recalcitrant dealerships — not an easy task for any car company.

But Hyundai indicated here that it is ready to take on its supposedly better-heeled rivals in a one-on-one quality contest. In an event that once would have been viewed as an act of corporate suicide, the company invited a group of international journalists here to do a head-to-head comparison of the new Hyundai Veracruz against the renowned Lexus RX350 mid-size crossover sport utility, which costs about $11,000 more.

I will give full details of the Veracruz-RX50 drive-off in a forthcoming On Wheels review. But here is an initial reading: After a day-long drive of both vehicles over many twisty California roads, most of us left the event wondering why any consumer would pay more for the Lexus RX350.

Score one for Hyundai in its mission impossible.

By Warren Brown The Washington Post
Sunday, April 1, 2007