Hyundai moves up from bargain basement
<h1>Hyundai moves up from bargain basement</h1>
<h2>Fifth-generation Sonata the equal of Accord and Mazda6</h2>
David Booth
National Post
May 6, 2005
First it was the Japanese manufacturers undercutting Detroit. Then along came the Koreans who undercut the Japanese automakers.
In each case, the progression was the same.
A new import manufacturer comes in with an inexpensive range of cars, priced far below the established marques and, despite perhaps flagging performance and quality, it grabs a significant portion of the low-end market. And as part of that natural progression, eventually, the new kid on the block figures out that greater profits are to be had if it can move the brand and its products upscale. Eventually, the once bargain-basement cars cost nearly as much as the established models and they are competing head-to-head.
That's what happened with Honda and Toyota, and that's the situation for Hyundai in North America right now. The company that once foisted the rust-prone Pony upon us now manufactures the most reliable car sold in North America. Yes, if you trust Consumer Reports magazine -- as hundreds of thousands of existing and potential automobile owners do -- the Hyundai Sonata is the car least likely to give you grief.
The fifth-generation Sonata -- scheduled for launch in about four weeks -- is the equal of the Camry, Accord and Mazda6 that serve as the segment's stalwarts. The new 3.3-litre engine is just as smooth as the competition's, the chassis is more than adept and the interior is well crafted.
A skeptic might posit that it's not a moment too soon. As last week's Motor Mouth column noted, the Chinese are coming and they are likely to undercut even the cheapest Korean import by quite some margin. Already, Malcolm Bricklin and DaimlerChrysler are threatening to import Chinese-manufactured cars to North American shores. With skilled autoworkers costing less than US$2 an hour, it's likely that more will follow.
This has already been factored into Hyundai's grand scheme, says Steven Kelleher, the chief of the company's Canadian distributor.
"We know that we have to move further upscale or not survive," says Hyundai Canada's president and CEO. "If you want to make money in North America, you have to be successful in the compact and mid-sized sedan segments as well as the SUV market. We know we've relied on the Accent for too long and that we have to expand our product portfolio."
That's likely to also include yet another sport-utility vehicle, says Mr. Kelleher, this one larger than both the Santa Fe and the new Tucson. "In about six months, we're going to launch an all-new Santa Fe that will be larger than the current model as well as be priced further from our entry-level Tucson.
"After that, we'll be seeing a third sport-ute, upscale even from that larger Santa Fe," he adds.
A replacement for the company's XG350 entry-level luxury sedan is also coming. With the Sonata more established, Hyundai hopes the Azera will sell more than the trickle of XGs that have so far entered this country.
That's not to say that Hyundai has forgotten its roots. Mr. Kelleher is planning to import a Toyota Echo- sized hatchback. Already sold in Asia, Europe and Australia, he hopes Canada will see the budget-priced runabout in 2007. And, says Mr. Kelleher, it will be priced "in the $11,000 range."
But that doesn't change Hyundai's focus away from its new corporate motto of "refined and confident." More directly, Mr. Kelleher says Hyundai is moving away from its reputation as a bargain-basement automaker and will "benchmark the best sedans on the market and then improve on them wherever we can."
It's a far cry from the original Pony.
http://www.canada.com/national/nationalpost/specials/driversedge/story.html?id=ae8879a5-7804-49b8-a363-7cdd3c6acf6b
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