Hyundai Seeks Higher-End Solution

To beat sluggish domestic demand and a rising Korean won, South Korea's Hyundai Motor Co.  aims to sell more premium vehicles overseas.

The country's dominant auto maker has fared well in recent years with robust sales of sedans such as the Sonata and the Elantra compact. But with foreign rivals encroaching on its home turf and the rising won threatening earnings, Hyundai is shifting focus to the higher end of the auto market.

 

Hyundai Motor Chief Operating Officer Im Tak-Uk says the company is shifting its focus to models like the Equus luxury sedan.

"We are selling more of the lucrative sport-utility vehicles and mid- and large-size sedans," said Chief Operating Officer Im Tak-Uk.

Upscale models accounted for only a third of the 4.41 million vehicles Hyundai sold world-wide last year, while small passenger cars made up more than 60%. The company targets total sales of 4.66 million vehicles this year, and Mr. Im said "raising prices is also an option" to bolster earnings.

Hyundai sold 425,782 SUVs such as the Santa Fe and Tucson and higher-end sedans such as the Equus, Genesis and Azera to the U.S., China and the Mideast last year, 26% more than two years earlier.

 

"If Japanese car makers become aggressive in raising incentives and the red light comes on in achieving our sales target in the U.S., we will consider raising incentives [for buyers] in the U.S.," said Mr. Im, who is in charge of Hyundai's international operations.

Hyundai's U.S. sales in January were up 2.4% from a year earlier, far short of the 14% pace set by the U.S. car market as a whole. For the full year, the company aims to sell 734,000 vehicles in the U.S., up 4.4% from a year earlier.

"If Hyundai posts a strong performance with its SUV models, it will help cushion the impact of unfavorable currency moves and the lack of new cars," said Suh Sung-moon, an analyst at Korea Investment & Securities.

The Korean won has gained 6.4% against the dollar since the start of last year. The stronger currency makes exports more expensive for overseas buyers, and diminishes overseas earnings when they are repatriated.

Hyundai plans to run its overseas plants at full capacity to make up for any decline in output in South Korea, Mr. Im said. The company and its workers in South Korea have agreed to cut working hours beginning in March, dismantling a shift system that has been in place since 1973.

Hyundai has plants in the U.S., China, Turkey, the Czech Republic, Russia, Brazil and India.

The auto maker is set to introduce only one model to the domestic market this year, the all-new Genesis sedan.

Mr. Im said Hyundai is working on a new marketing program in the U.S. but didn't elaborate.

 

Source: Wall Street Journal