A Struggling Hyundai Jumps On The Crossover Bandwagon To Reverse Its Fortunes In 2018
Rachel Premack, ContributorDec 26, 2017
A Hyundai Motor Co. employee inspects a Genesis G80 sedan at a company dealership in Seoul, South Korea, on Jan. 23, 2017. (Photographer: SeongJoon Cho/Bloomberg)
2017 was a ho-hum year for U.S. auto sales. It’s destined to be the first annual decline in sales since the Great Recession.
November sales reflect that Hyundai was particularly struggling, USA Today reported. Their sales were down 8.5% compared to last year, where General Motors slipped by 2.9% and Toyota by 3%. Ford Motor jumped by 7% and Honda enjoyed a record November sales boost of 8%.
The first 11 months of 2017 saw a 1.7% decrease from the same period last year, according to data from the U.S. Bureau of Economic Analysis. And Hyundai slipped far more than the average automarket this year, Barron’s reported. Its U.S. sales tumbled by 18% and global sales are expected to be down 6%. Thanks to the THAAD diplomatic spat, the South Korea-based automaker sold 40% fewer cars in China this year.
Here’s how Hyundai plans to turn around its grimace-inducing U.S. sales in 2018.
An expanded, unconventional crossover selection
The automakers that flourished in 2017 largely did so thanks to their offerings of heftier vehicles. In 2014, crossovers edged out sedans as America’s vehicle style of choice due to sinking gas prices, and SUVs and pickup trucks are also luring consumers from smaller vehicles.
Years later, that trend shows little sign of abating. Three of 2017’s five best-selling cars are crossovers. Chevrolet crossovers sales boosted by 16% and Buick crossovers by 20% in November. Honda’s CR-V, a longtime crossover darling, grew by 6.7% during the first 11 months of 2017 compared to the same period last year, and sales of Honda’s sports utility truck jumped by 62.9%.
It’s not just Americans who are in a crossover frenzy. Compact SUVs now claim a quarter of the European market and the model is booming in China. Even Ferrari is rumored to be developing a crossover – a clear pivot for the celebrated sports car company.
An employee assembles an engine on the production line at the Hyundai Motor Manufacturing Alabama (HMMA) facility in Montgomery, Alabama, U.S., on Wednesday, July 19, 2017. (Photographer: Luke Sharrett/Bloomberg)
But the model is not yet trendy in Korea, where Hyundai is based. Nevertheless, its Orange County, California-based U.S. offices announced in November that it would launch eight new or re-engineered crossovers by 2020, Automotive News reported.
“Pretty soon we are going to have the most diverse CUV powertrain lineup in the industry,” said Mike O’Brien, vice president of product planning for Hyundai Motor America, in a statement.
First is the Hyundai Kona, a small SUV that’s slated to sell by spring. The Kona will be followed by a diesel crossover model and a battery-electric vehicle – perhaps those unconventional crossovers will mitigate its latecomer status to the segment.
Goodbye Lexus, hello Genesis
While Hyundai’s overall U.S. sales have been suffering, especially considering its double-digit sales growth in the early 2010s, its newly-launched luxury brand provides a bright spot. Genesis Motors was established as an independent division within the Hyundai Motor Group in November 2015, grouping Hyundai’s two luxury vehicles.
Bozhena Lalova, a head of Genesis Color and Trim of Hyundai Motor Co., speaks to the media next to a new sedan Genesis G70 during its unveiling ceremony in Hwaseong, South Korea, on Sept. 15, 2017. (AP Photo/Lee Jin-man)
Genesis, which is slated to have six models by 2020, still lacks much name recognition in the U.S. Three-fourths of its 150,000 vehicles were sold in Korea. And globally, Hyundai is still seen as a value purchase.
Manfred Fitzgerald, who heads Genesis Motors, recognizes that it could be a while until Genesis is a household name — or mansion-hold name, as the case may be. “There’s no shortcut to that,” Fitzgerald said to Jalopnik in June. “There’s nothing that I would try to rush by any means, but what I will say that with today’s technology, I think if you can get it right and if you are authentic and credible and not trying to play somebody, I think you can accelerate the whole process of creating brand awareness.”
Employees perform final inspections on Hyundai Motor Co. Genesis luxury sedans on the production line at the company’s plant in Ulsan, South Korea, on Monday, April 24, 2017. (Photographer: SeongJoon Cho/Bloomberg)
The initial signs are positive. Genesis received top marks for customer satisfaction in the luxury car sector, bested only by Tesla and Porsche. Where Hyundai’s sales are flailing, Genesis grew from 2,700 vehicle sales last year to 15,000 this year, according to sales data up to September 2017.
Reviewers are also approving. As Jalopnik’s Kristen Lee wrote in the June article, “This is no Korean economy car.” Whether Genesis can convince everyone else of that remains to be seen.