Hyundai going upscale
The Korean automaker plans to sell its first U.S.-made luxury car in 2007, expecting quality to aid its biggest model expansion in 2 decades of marketing.
Bloomberg News
Hyundai Motor Co. plans to sell its first luxury car in the U.S. as early as 2007, counting on improved quality to aid its biggest model expansion since entering the market almost 20 years ago.
Hyundai expects to have a revamped version of its current luxury sedan, the Equus, which is sold mainly in South Korea, within two years, Vice Chairman Kim Dong Jin said last week in Montgomery, Ala., at the opening of its first U.S. factory. The name and time for release of a U.S. version haven't been decided, said John Krafcik, vice president of U.S. product planning.
Hyundai's U.S. operations are based in Fountain Valley.
"This car could allow them to start to shift their pricing, to eventually eliminate the $4,000-to- $5,000 gap" with Honda and Toyota "if it convinces consumers Hyundai is a high-quality brand," Wes Brown, an auto analyst at consulting firm Iceology in Los Angeles, said Wednesday.
Hyundai wants to more than double U.S. sales to 1 million vehicles a year by 2010. Starting with the Tucson sport utility vehicle that debuted in November, the Seoul- based automaker plans seven new or revamped models in 24 months. Hyundai almost tripled U.S. sales to 418,615 last year from 1999, overcoming quality concerns that arose with the Excel car in the late 1980s.
The Hyundai brand ranked 10th among 36 brands in the 2005 initial-quality study by J.D. Power & Associates, just ahead of Honda and better than the industry average. "They have felt the product has been truly competitive with Honda or Toyota for a while," Brown said.
Hyundai doesn't plan a new brand for its luxury car, at least for now, forgoing the strategy of a separate U.S. luxury line used by Toyota and its Lexus brand, Honda's Acura and Nissan Motor Co.'s Infiniti. "If we have a second channel, we'll make the decision in 2007, 2008," Krafcik said in an interview.
Hyundai is spending $100 million in the U.S. in 2005 to promote its brand image, the Montgomery plant and its new models. The company plans to add a redesigned Sonata sedan this month, followed later this year by the new Azera large sedan and revamped Accent small car, and followed in 2006 by a new minivan and redesigned Santa Fe SUV and Elantra small car.
The luxury car will be "a step above Azera," Krafcik said, without elaborating on features or price. The current Equus is a rear-wheel- drive sedan with a six- or eight-cylinder engine. All of Hyundai's U.S. car models now have front-wheel drive and four- or six-cylinder engines.
Hyundai seeks to compete against established luxury brands such as BMW and Toyota's Lexus as part of a strategy to offer a full line of cars and trucks in the U.S. and burnish a reputation for quality, Krafcik said.
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