Hyundai Brand Goes High End

If the name Hyundai evokes an image of low-cost econoboxes, you may want to check out the Korean carmaker’s nearest showroom. Prepare to be surprised.
At next week’s New York Auto Show, Hyundai will spotlight the 2014 Equus, the mid-cycle update of its premium-luxury sedan. The sedan will compete with high-end makes, such as the Mercedes-Benz S-Class and BMW 7-Series.

Although you can buy a basic Hyundai Accent for $15,000, a fully-equipped Equus will nudge you over the $70,000 mark.
Don’t expect much of a discount at the dealer. The average Hyundai went out the door with givebacks around $1,420, according to data gathered by TrueCar.com, a lower figure than any other major manufacturer but Honda.

The good news for Hyundai is that it broke its all-time sales record last year, and did it again in January and February. The bad news is that it is losing market share because it can’t keep up with the pace of the U.S. automotive recovery.
“We just can’t build anymore,” Hyundai Motor America CEO John Krafcik said in San Diego, where he was presiding over the first media drive of the new 3-row 2014 Hyundai Santa Fe crossover-utility vehicle. “We’re just out of production capacity.”

In recent months, Hyundai dealers have had to get by with about half the 60- to 65-days of inventory considered normal in the automotive business.
(“A tough problem to have,” smirks analyst Joe Phillippi of AutoTrends Consulting.)
This has allowed Hyundai to trim its incentives and allowed dealers to prey on a “scarcity value” to fend off the bargain shoppers of Hyundai’s past. The average transaction price – the actual figure the typical customer paid after working in discounts and options – jumped by 5 percent, year-over-year, to $22,549 in February, according to TrueCar.

Hyundai handout

The "butterfly doors" distinguish the HND-9 sports coupe from other recent Hyundai concepts.

Phillippi and other analysts say they’re surprised by Hyundai’s success. It’s been just four months since the maker – and its Korean sibling Kia -- acknowledged the two brands fudged test results and would have to restate the fuel economy numbers on 13 different models, some by six miles per gallon.

Since then, the Korean makers have settled a lawsuit and agreed to provide substantial reimbursement to the 900,000 owners affected.

Hyundai’s transition from a fire sale brand has required a shift in focus that began by targeting once-endemic quality problems and backing that up with an industry-leading, 10-year warranty program. The maker has steadily gained ground in a variety of third-party measures, notably the quality and customer service surveys by J.D. Power and Associates. The current version of the Equus outscored Lexus, the overall top brand in Power’s latest Customer Service Index.

That has Hyundai management confident they can continue to expand their presence in the luxury market. The maker will show off what it describes as a “luxury sports coupe concept,” the HND-9, at the Seoul Motor Show next week. While the unusual “butterfly doors” are likely a show gimmick, industry observers expect the HND-9 is a clear hint of new products to come.

That gets back to the question of where to build the cars. Hyundai has added a third shift at its Alabama factory Alabama and it has crossovers rolling out of the Kia plant in Georgia.
While Krafcik says there are “no plans, yet,” for adding more capacity in the U.S., analysts like Phillippi stress that could change quickly. The Koreans appear to be using the moment as an opportunity to decide whether to expand, and few would be surprised if an announcement didn’t come sometime this year.

But Hyundai has learned from watching competitors’ mistakes, especially when it comes to overstocking. The goal, Krafcik says, is to follow the strategy of the most successful luxury brands, and “always be one car short of demand.”

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The Santa Fe: Hyundai's love letter to America

The growing preference among American motorists for crossover utility vehicles -- so-called CUVs -- is reflected by the stream of new variants to reach showrooms. The latest? Hyundai's seven-passenger Santa Fe.
Hyundai has risked confusion by calling its new model the Santa Fe -- not to be confused with its five-passenger Santa Fe Sport, a similarly styled CUV introduced last year. Hyundai decided to drop the Veracruz tag used on its outgoing seven-passenger CUV, a name that surely would have resonated better in Mexico.
The new Santa Fe is the latest salvo from the South Korean automaker, whose presence in the U.S. continues to strengthen by dint of new vehicle models that, by all accounts, are being received warmly by American consumers. Hyundai has helped its cause by maintaining production discipline and avoiding the cycle of inventory gluts and deep price discounts that have hurt other manufacturers.
"Our chairman has been very clear that we're going to concentrate on quality, not on opening new factories as fast as possible," said John Krafcik, chief executive of Hyundai's U.S. arm. Chung Mong-koo is chairman and chief executive of Hyundai Motors Co. and its affiliate, Kia Motors Corp. Speaking about Santa Fe and other Hyundai models, Krafcik said the company's U.S. sales have been constrained only by the ability of factories to meet demand. According to Edmunds.com, Hyundai dealers had 42 days supply of vehicles in inventory, compared with 64 days supply on average for the industry at large.

Santa Fe is positioned to compete primarily against Honda's Pilot, Toyota's  Highlander and Nissan's Pathfinder, and secondarily against the Ford Explorer and Mazda CX-9. All the models are roughly the same size and have three rows of seats, which make them attractive for families.
The Santa Fe Sport, the variant introduced last year, seats five in two rows, plus rear cargo space. It competes against the Ford Edge, Chevrolet Equinox, Nissan Murano and others. Crossovers have grown to about 21% of the U.S. vehicle market by of the end of 2012, from 13% in 2007. Traditional SUVs, by contrast, have fallen over the same period to about 4% from 10%.
Crossovers -- what were called "station wagons" in antiquity -- are inherently more fuel efficient due to unibody construction, which is similar to that of a passenger car. SUVs, by contrast, are heavy, powerful, and relatively fuel inefficient because most were built on truck frames.

Alec Guitierrez, a senior analyst at Kelly Blue Book, said Hyundai's decision to drop the Veracruz name most likely stemmed from slow sales of that model. With only 12,700 units sold in 2007 (and 8,232 all last year), the Veracruz hardly put a dent in the sales of other models with three rows, such as the Buick Enclave and GMC Acadia, both built by GM (GM). The Santa Fe, by contrast, contended well against the Murano, Mazda CX-7 and Toyota Venza. "Santa Fe has considerable brand equity, and consumers have grown to trust the nameplate," Guitierrez said.
The new model will round out Hyundai's three-pronged approach to CUVs: the Tucson for "pre-families" -- a.k.a. singles and couples -- Santa Fe for families, and Santa Fe Sport for "post families," those whose children have flown the nest.
For now Chairman Chung's preference for quality over quantity is paying off for Hyundai and its dealers in higher transaction prices on its vehicles. The temptation will be strong in the not-too-distant future to expand its U.S. production network, perhaps by building another assembly plant.

Thank you for the great review!

I am surprised to see such terrible reviews as this does not reflect the experience my wife and I had at all. When we first called inquiring about a vehicle Josh Moon was the sales associate that we talked to. He was very knowledgeable and inviting without being pushy or over bearing. For this reason we chose to go take a look at what he had to offer. In the end we purchased a car to replace my wife's car. This was probably the most enjoyable car transaction I have ever had (if buying a car can be enjoyable). It should be noted my wife and I both hate car shopping and had put it off for as long as we could. Because our experience with Josh went so well we contacted him again when we needed to replace my car. Again it was a no pressure, no hassle type of experience and again we purchased another care from Josh. I can't speak for the entire dealership but what experience we have had with them including the maintenance department has always been good. I can't recommend Josh enough if you want a good deal with a friendly, knowledgeable no pressure sales experience he is who you want to talk to. We will be back when it is time to replace car.-Dave

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2013 Hyundai Santa Fe Sport: Redesigned Crossover has sleeker styling

The mid-size 2013 Santa Fe Sport crossover has rakish new styling similar to that of Hyundai Sonata and Elantra sedans. It also has carlike road manners and plenty of room.
The Santa Fe Sport should do well, even though it’s up against rivals such as the Honda Pilot, Chevrolet Equinox, Ford Edge, Nissan Murano and Toyota Highlander.
The five-passenger, two-row Santa Fe Sport should not be confused with the costlier, longer-wheelbase seven-passenger, three-row Santa Fe, which has replaced Hyundai’s underachieving 7-passenger Veracruz. That Santa Fe lacks the word “Sport” in its name, but comes with a 3.3-liter, 290-horsepower V-6.
The solidly built Santa Fe Sport lists from $24,450 to $29,450 and comes with either front- or all-wheel drive (AWD). It weighs 3,459 to 3,706 pounds, depending on the drive system.
You can’t get the Sport with the longer Santa Fe’s V-6. Rather, power comes from a 2.4-liter, 190-horsepower four-cylinder or a turbocharged, direct injection 2-liter four-cylinder with 264 horsepower.
Both engines work with a responsive six-speed automatic transmission.

2013 Hyundai Santa Fe Sport

I recommend the turbo engine. It reminded me of the Volkswagen/Audi turbo 2-liter in that it operated smoothly, provided fast acceleration and acted like a larger engine.
Estimated fuel economy of the 190-horsepower engine with front-drive is 21 mpg in the city and 29 on highways, or 20 and 26 with all-wheel drive. Figures for the turbo engine with front-drive are 20 city and 27 highway—and 19 and 24 with with all-wheel drive.
I tested Hyundai’s $27,700 higher-line Sport 2.0T model with the turbo engine and front-wheel drive and found it to be carlike and—typical of Hyundais—packed with a good amount of standard equipment.
Standard items for the 2.0T include heated front seats, power driver’s seat, proximity key entry with pushbutton start, automatic headlight control, AM/FM/MP3 sound system, steering-wheel-mounted cruise, audio and phone controls, electroluminescent gauge cluster and split-folding rear seatbacks. There also are a sporty chrome twin-tip exhaust and front fog lights, besides 19-inch silver alloy wheels.
There also are stability and traction controls, a vehicle stability management feature, anti-lock brakes with brake-force assist and distribution, downhill and hillstart assist controls—with the usual airbags, including a driver’s knee bag.
Rear visibility through the back window is poor. Large outside mirrors help. But if you’ve got the bucks, I’d recommend the optional rearview camera, which comes in a $2,450 option package that also contains leather seating surfaces, power front passenger seat, heated rear seats, dual-automatic temperature control and an easily read 4.3-inch color audio display.
A $2,900 “technology package” has a panoramic sunroof with tilt-and-slide features, navigation system with an 8-inch touchscreen, upscale audio system and a heated steering wheel, a blessing during cold Chicago winter days.
Too bad for your bank account the optional packages must be ordered to get the rearview camera, sunroof, power front passenger seat, upscale audio and navigaton systems and the heated wheel. But Hyundai isn’t the only automaker to put desirable items in fairly expensive “option packages.” Some just put them in higher-scale models.
My test Sport’s automatic transmission had an easily used manual shift feature. The quick steering felt somewhat numb, but the Sport tracked well at highway speeds, which will help make it a good long-distance interstate cruiser.
The ride was rather firm, but supple, and handling was pretty good for a 66.1-inch-high vehicle in which occupants sit high. The brake pedal had a nice progressive action.
The driver’s seat in the quiet interior has decent side support during spirited driving and is comfortable, as are the Sport’s other seats. However, the center of the backseat is too stiff for comfort.
Climate controls are large, and sound system controls are easy to use, as are the optional front-seat heat controls. The console has nicely placed dual front cupholders and a deep covered storage bin. Large front door pockets contribute to interior storage. There’s a good amount of interior plastic, but it doesn’t look cheap.
The opening for the large cargo area is low and wide, and rear seatbacks easily flip forward for more cargo room, with a large pass-through area from the regular cargo area to the rear-seat area. The hatch opens smoothly on hydraulic struts and has a handy, hefty interior pull-down bar.
The hood has an interior lining for sound control and smoothly swings up via twin struts to reveal a surgically neat engine compartment.
The Sport has Hyundai’s 10-year/100,000-mile powertrain warranty, which helped save its reputation years ago, and a 5-year/60,000-mile new vehicle warranty.
“Good styling sells,” as the saying goes. So the Santa Fe Sport’s new styling and features should help attract a larger number of buyers and further increase Hyundai’s already impressive U.S. sales.
Pros: Sleeker styling. Roomy. Fast with turbo engine. Agile. Decent fuel economy. Available all-wheel drive.
Cons: Numb steering. Poor rear vision. Desirable items in option packages.
Bottom Line: The Santa Fe Sport crossover provides strong performance and good utility.

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