Hyundai’s European business gets noticed
Thursday, March 8, 2012
GENEVA (AP) — Hyundai’s European business is getting noticed, and not just by competitors.
Making a rare appearance in Europe, Hyundai Motor Co. Ltd. Chairman Mong Koo Chung stopped by the brand’s stand at the Geneva Motor Show on Wednesday before checking out the competition.
“I think it shows from a professional perspective, we are on the map,” Hyundai’s chief operating officer for Europe, Allan Rushforth, said in an interview.
The South Korean automaker has improved sales and market share while posting a profit in a down market, in sharp contrast to most of its European mass-market competitors. And, unlike its European competitors who are seeking strategic alliances to share technology and cut costs, Hyundai is going it mostly alone.
“The general orientation of the group tends to be toward proprietary solutions and the development of the Hyundai Motor Group brands, rather than development forged on alliances,” Rushforth said.
The independent thinking has been working.
Hyundai’s European sales grew 11.5 percent to 398,129 vehicles last year for a 2.9 percent market share, up from 2.6 percent. It is expected to reach a 3.5 percent market share in 2012. Rushforth declined to break out Hyundai’s European profits, which are consolidated into the group’s results.
It is the European mass-market stalwarts that are taking the hit.
“In Europe, in terms of conquest sales, we are taking business from Opel, from Volkswagen and from Renault,” Rushforth said.
Kia, which is part of the Hyundai Group, sold an additional 293,960 cars, increasing its market share to 2.2 percent from 1.9 percent.
That’s in a European market that contracted 1.4 last year. By comparison, Toyota sales slid 6.3 percent, PSA Peugoet-Citroen’s dropped 8.8 percent and Fiat shed 12 percent, according to the European Automotive Manufacturers’ Association.
Part of the success of Hyundai is because most cars sold in Europe are manufactured in the lower production cost countries like the Czech Republic, where they could amp up production, and Turkey. With 20 percent of cars imported from South Korea, Hyundai also benefited from the EU-South Korea free trade agreement.
Rushforth said that Hyundai was able to reach critical mass in Europe thanks to the scrappage schemes giving bonuses to consumers to junk clunkers for new cars just after it had introduced a range of vehicles with low carbon emissions into the market, including the top-selling i30 hatchback.
“It was an opportunity. It was a one-off distortion in the market that provided us with a springboard to consolidate growth beyond scrappage,” Rushforth said.
“We took advantage in Germany, and we were quickly able to transfer the knowledge to the U.K., France, Spain and Italy.”
Although Hyundai is known as a value brand, Rushforth said its European models tend to come in at 96 percent of the median price of its competitors in a given segment. Hyundai has attracted new buyers with a five-year warranty, which he said also creates loyalty that they are working to translate into repeat purchases.
IHS Automotive analyst Paul Newton warned that Hyundai’s moves to inch up its price position on models like the i-30 station wagon unveiled in Geneva could make it more difficult for the brand to continue it growth pace.
“Hyundai will struggle to gain at the same rates as the last few years as they compete on brand values and image, rather than value,” Newton said, adding that the rise of Hyundai and Kia posed a “serious threat” to Europe’s mass-market brands.
In Geneva, Hyundai also showed off the sculpted i-onig concept car, aimed at promoting a fresh design edge.
“Until now our brand has been about value, low emission and high quality, and often the quality is far ahead of customer perception,” Rushforth said.
“We are a much more emotional purchase these days than we were four years ago,” he said.
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