Doubt cast over Hyundai redesign
Optimism over Hyundai Motor’s first major makeover of its key models in about five years may fizzle as some industry insiders question whether the redesigns are too conservative for international tastes.
Hyundai is facing fierce competition in its home market of South Korea. Free-trade deals opened the door for US, Japanese and European rivals, which are chipping away at its share in a market it is accustomed to dominating.
To better compete, the company plans to launch a new, significantly redesigned version of its Genesis large car as early as next month, and a revamped Sonata mid-sized sedan early next year, although neither is likely to carry a new engine.
Hyundai is expected to tone down the Sonata’s bold lines and curves in a bid to appeal to a broader audience and boost sagging volume growth, particularly at home.
But that could backfire in other vital markets such as the United States, where its flashier style is popular and has helped Hyundai establish a credible presence over the past few years.
“The two new models are the first to reflect Hyundai’s more moderated version of its design language, and are key to energising its growth,” said Sang Alexander Koo, a professor and former designer with Hyundai’s affiliate Kia Motors.
“While the new Sonata will help embrace conservative consumers, it will not have as much impact as the current model did … The new Sonata could draw as much divisive views as the current model. Some will say the change is weak, and others may like it because it’s more moderate.”
Hyundai spokesman Brian Sir said the company was “confident that our Fluidic Sculpture design language will continue to be highly successful”. Fluidic Sculpture is a phrase Hyundai often uses to describe its style.
Expectations are already running high that the overhaul of an ageing lineup will help Hyundai raise prices and bounce back from what is likely to be an earnings decline this year, its first since 2008.
The Sonata’s last big makeover came in 2009, just as the global financial crisis was crushing car sales. Hyundai opted for a bold style change, which helped it win a record share of the US market and escape the industrywide downturn largely unscathed.
But the bold look didn’t go down well in South Korea, its second-biggest market, where conservative styling is preferred. Now Hyundai is facing an uphill battle at home against foreign rivals, which have benefited from free-trade deals and taken 12 per cent of the market so far this year, up from just 2 per cent a decade ago.
It could soon face the opposite problem.
“The new more conservative design might work in Korea, but it could well fall short of the company’s expectations in the US and China, those two key markets for volume,” said an industry insider who has seen the new Sonata.
“Hyundai people think it its refined, but the car lost the identity it gained with the current model,” the insider said.
A second source who has seen the new model told Reuters it looked “like a car from the ‘80s or the early ‘90s”.
The new models come at a critical time for Hyundai and Kia, which are trying to rebuild their reputation after a massive recall in the United States and an embarrassing admission that their much-touted fuel mileage claims were overstated on more than one million cars.
Hyundai’s US sales inched up just 2 per cent in the January-to-September period, lagging behind the industry’s 8 per cent rise and its own 4 per cent growth target for this year. In South Korea, the combined market share of Hyundai and Kia shrank to 69 per cent in September, from 75 per cent last year.
Imported rivals such as BMW, Lexus and Volkswagen are rapidly increasing sales by offering stylish, fuel-efficient models at cheaper prices. Hyundai’s current engines are expected to be carried over to the next generation, unlike in the past, when Hyundai refreshed its powertrains every five years, said Chung Sung-yop, an analyst at Daiwa Capital Markets.
Hyundai said some of the new Genesis versions will be all-wheel drive as it seeks to go up-market with premium models to better compete with rising sales of luxury imports.
“For Hyundai, Genesis will be a make-or-break model. Being the mass-market producer, they need to do it right to win premium image and achieve higher profitability,” Chung said.