Hyundai fumbles in US as Elantra stalls
SEOUL: At last February’s Super Bowl, Hyundai Motor hired ‘ X-Men’ movie star Ryan Reynolds for an ad plugging the new version of its Elantra sedan. Not in the script: a slide in fi rsthalf sales of the South Korean carmaker’s US mainstay.
When the previous redesign hit the United States in 2011, sporty styling at an attractive price helped it take on Japanese rivals like the Honda Civic and Toyota Corolla. At the Elantra’s peak, more than one car in every 20 sold in America was a Hyundai, cementing the fi rm’s place as the world’s fi fth-biggest carmaker combined with sister company Kia Motors.
But not even a Hollywood superhero could shield the new Elantra from structural change in the US car market. Hyundai’s aspiration to sell premium cars saw it deliver a more sedate Elantra this year with a higher price - just as American buyers turned away from sedans, rediscovering a taste for gasguzzling sport utility vehicles in a world of low oil prices.
From being Hyundai’s top US seller last year, Elantra sales skidded 25 per cent in fi rst-half 2016, trailing a seven per cent drop in its market segment, according to data from the company and Autodata Corp. On Tuesday, Hyundai said net profit fell for the 10th straight quarter, warning the US market is about
The Elantra followed much of the Sonata’s styling... The market is deciding that sedans need to be more compelling than ever to win over buyers who are turning to crossovers at a skyrocketing rate.
to get tougher still.
“I have built my sales and my reputation at Hyundai as being the value brand,” said Scott Fink, chief executive of Hyundai of New Port Richey, Florida, the biggest US Hyundai dealership.
“I understand the company’s desire to move upstream... but now you’re in the same ocean with Toyota and Honda, and Toyota and Honda most specifically in the US have a much longer and better reputation than Hyundai, and we’re not there yet.”
Fink, a member of Hyundai’s US dealer council, said the fi rm “moved too quickly” in attempting to raise prices for its cars. “US dealers are disappointed by the sales performance of the 2017 Elantra,” he said, referring to the latest model in a phone interview with Reuters.
Hyundai has invested in marketing since the late January launch, expanding the Elantra line-up. It said US Elantra sales have steadily improved month on month, describing sales in the fi rst half of July were “very strong”.
Zayong Koo, Hyundai vice president in charge of investor relations, told an earnings conference on Tuesday that sales incentives to coax buyers into showrooms jumped in the fi rst half, without saying how much the promotions affected profitability.
In the fi rst half, Hyundai sold 374,000 cars in the United States, up 0.8 per cent from a year earlier, bolstered by sales of its Tucson SUV.
Under its “Paycation” programme, Hyundai is now offering sales with zero payments until 2017 on the new Elantra, as well as car loan fi nancing with a low annual percentage interest rate of 0.9 per cent for up to 60 months.
Offering incentives to stimulate buyers comes at a fi nancial cost that Hyundai will have to soak up. But its shrinking US market share highlights the need for action.
In 2011, on the strength of the previous generations of the Elantra – which dates back to 1990 - and the larger Sonata sedan, Hyundai’s US market share peaked at 5.1 per cent.
But the Elantra’s fall from grace, along with a slow start for a 2014 redesign of the Sonata criticised as staid, means Hyundai’s market share has now been squeezed back to 4.3 per cent, its lowest since the 2009 economic downturn.
The falling popularity of sedans versus SUVs and crossover vehicles that span the two categories has hit Hyundai harder than peers. Sedans accounted for 73 per cent of Hyundai’s US sales in the fi rst half of this year, while the portion was 42 per cent for the industry, according to Autodata.
The redesigned styling of its sedans is more “mature”, the company says.
For Dave Sullivan, an analyst at consultancy AutoPacific, “The Elantra followed much of the Sonata’s styling...The market is deciding that sedans need to be more compelling than ever to win over buyers who are turning to crossovers at a skyrocketing rate.” — Reuters
Dave Sullivan, analyst at consultancy AutoPacific,