Hyundai Motors: Reinventing Itself

Anthony Fontanelle
August 9, 2007

Hyundai Australia is reinventing itself by engaging into a new marketing campaign. This is an effort to dramatically increase sales and improve product lines. But the consequence of this move could be burdensome to shoppers - it means they will be paying more.

Once the terror of the local industry with its pace-setting prices of $14,990 and then $13,990 drive away, Hyundai has had to change its tune, wrote Ian Porter of The Age. He added the strength of the Korean won relative to other Asian currencies has seriously eroded Hyundai's margins. A depreciation of more than 20 per cent in the yen over the past year has handed Japanese producers a huge price advantage in Australia and elsewhere.

In the 1990’s, the Korean automaker was the fifth largest manufacturer in Australia. Now Hyundai lands on the eighth spot, notwithstanding the fact that it is fifth worldwide.

According to Kevin McCann, Hyundai’s sales and marketing chief, the company needs to shake off its image as a producer of cheap, mass-market transport and become known as a supplier of state-of-the-art vehicles. Customers were not yet willing to pay the same price for a Hyundai as they did for a Toyota or Mazda, McCann said, even though Hyundai was confident its latest cars gave nothing away in terms of quality and features.

"We are not trying to move from being a mass volume brand to a premium brand," McCann said at the launch of the Santa Fe two-wheel-drive V6 in Sydney. "We are simply trying to move from being a credible alternative to being a mainstream brand. Say the average price of a small car today is $20,000 and our main competitor's price might be $21,000. Our price is $19,000. We need to build our brand up so we can sell at $21,000."

Hyundai has already adopted the quality and design standards needed to give good reason for the higher prices. The transformation does not only include an improved Hyundai Scoupe radiator but a total overhaul. McCann said that the company was most of the way through a thorough transformation of its products, drawing heavily on the group's European design and engineering office.

Hyundai in Korea has increased its spending on research and development to more than 6.8 billion a year and this is reflected in the hectic vehicle launch schedule, The Age revealed. In the past couple of years, the automaker has released seven models and said that it will be adding more in the coming years. Since it was launched in 2006, the Santa Fe has become the best-selling midsize sport utility in Europe.

Efforts do pay off. As a fact, Hyundai products are now featured regularly in the listings of the JD Power group, which gauges quality and productivity aspects of the American auto industry.

But McCann said that the image problem was not just confined to car buyers but to some dealers as well. "We can do a job with the product and specification, but the dealer has got to be able to convince the customer that the price we want them to pay is worth paying," McCann said. "There are some dealers who think the worst thing we can do is bring in more expensive models, because they don't know how to sell them."

Hyundai has started a training program for the staff of Australia's 143 Hyundai dealerships. The automaker has set up a small taskforce to aid dealers address "hot spots" and longer-term systemic issues. While McCann said that Hyundai gets "quite good feedback" from customers, the company would also use "phantom" buyers to check on dealerships.

Source:  Amazines.com