Hyundai: The Recession Surprise
The economy going into the crapper has been the big story this year and car companies were not immune to the ongoing struggle to get back to the surface for air. Around the world, new-car sales collapsed from more than 70 million in 2008 to less than 50 million for 2009.
And yet, while most car companies are doing all they can just to stay alive, South Korea’s Hyundai Motor Company has actually come out in better shape than before the onset of the recession.
Through November, Hyundai sold 401,267 cars and light trucks in the U.S., up 6.2% from 2008 while the overall market fell 24%. Its sales represent 4.3% of the American market, up 1.2 points from a year ago. Hyundai and Kia Canada also saw record sales, exceeding 100,000 in annual sales for the first time – six years faster than Toyota.
Many analysts attribute the rise in Hyundai’s market share to this year's bankruptcy filings of General Motors and Chrysler which prompted many American consumers to look to other car manufacturers. With their purchasing power shrinking considerably from year’s past, many consumers stopped splurging and started looking for more moderately priced models with plenty of features—just what Hyundai offers.
This jump in market share is in sharp contrast to the state of Korean car sales in the states just a decade ago, as many Americans then steered away from Korean cars after early versions garnered a poor reputation for quality and reliability. But earlier this decade Hyundai took a page out of VW’s playbook when they copied the marketing plan of the maligned “Jetta” by offering improved quality while backing the move with one of the industry's longest warranties: 10 years or 100,000 miles.
All is Not Rosy for Hyundai
Still, Hyundai faces challenges. One of the bigger problems is that Korean cars tend to lag behind competitors in resale value. According to Automotive Lease Guide, 2010 Hyundais will hold only 43.2% of their value after three years, compared to 52.3% for Honda, 49.5% for Nissan Motor and 49.4% for Toyota.
Another challenge Hyundai face is that it relies more heavily on "fleet sales"—sales to car-rental agencies and other bulk customers—than do many of its competitors. In November, Hyundai's U.S. sales soared 46% from the depressed level of November 2008, but about 30% of these sales went to fleet buyers.
The Year Ahead
Hyundai has seven new or redesigned models coming in the next two years, including the Equus, a full-size luxury sedan that is the company's flagship vehicle in Korea and abroad. Hyundai is crossing its fingers and hoping for the reception it received for the Genesis –which was the surprise winner of the 2009 North American Car of the Year award.