By on May 30, 2017

2017 Genesis G80 winter mountains - Image: Genesis Motors

Amid stagnating U.S. sales, a crash-dive in China, and a product lineup not optimally suited for growth, Hyundai is furiously crafting a salvation plan.

In North America and other utility-loving countries, the strategy is clear: more crossovers and a significant product shakeup. The little Kona is already on the way, though perhaps not as quickly as Hyundai had hoped.

China, however, presents a serious problem for the automaker. What was supposed to be a growth market for the company has now turned into the opposite. Hyundai’s share of the market has shrunk to 5 percent from last year’s 8.1 percent, which was down from years past. In March alone, after news of South Korea’s installation of a U.S.-supplied anti-missile defense system, Hyundai and Kia sales dropped 52 percent.

Determined to make the Chinese fall back into love, the automaker has a plan brewing.

According to Reuters, step one will be the creation of a brand experience center in Beijing’s artsy-fartsy 798 Art District. The center, which Hyundai believes will help would-be buyers familiarize themselves with the brand, will open in September.

“We’re not going to show a real car,” a company executive told Reuters. “This space is only for focusing on brand building.”

In China, Hyundai products are often viewed as lesser automotive fare, positioned well below Japanese and American brands. The brand center will try to get across the message that Hyundais are not just for taxi drivers.

Step two is all about product, with a small, China-only model expected to appear in November, sources say. That unnamed model is slated for production at a Chinese factory. If the utility vehicle isn’t enough to get the brand noticed, the company is reportedly considering dangling its upcoming Kia Stinger sports sedan in front of status-chasing drivers.

The third step is more complicated. While Hyundai has always planned to bring its Genesis luxury brand to China, possibly as early as next year, the automaker is now considering building some models in that country. By shipping knock-down kits to China, Hyundai would be able to slash import tariffs and prevent its joint venture partner from getting its hands on Hyundai technology.

“We are agonizing over how to source local parts and secure enough sales to build the Genesis cars,” a Hyundai source told Reuters.

[Image: Genesis Motors]

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44 Comments on “Desperate Times Lead Hyundai Into an All-Ideas-On-Deck Strategy...”


  • avatar
    JimZ

    “According to Reuters, step one will be the creation of a brand experience center in Beijing’s artsy-fartsy 798 Art District. The center, which Hyundai believes will help would-be buyers familiarize themselves with the brand, will open in September.

    “We’re not going to show a real car,” a company executive told Reuters. “This space is only for focusing on brand building.””

    Uwe Ellinghaus must have found a new gig.

  • avatar
    28-Cars-Later

    “In March alone, after news of South Korea’s installation of a U.S.-supplied anti-missile defense system, Hyundai and Kia sales dropped 52 percent.”

    Maybe I am misunderstanding, but how does a geopolitical move in South Korea equate to a sales drop in PRC. I’d also like to clarify was it a drop vs February or a drop YoY?

    • 0 avatar
      cdotson

      The Chinese government openly supports the NK regime. Any movement seen as threatening toward NK gets spun to the Chinese people as aggressive actions against the Chinese government by the state-owned media, causing public sentiment in China to turn against said aggressors. A few years back Japanese auto sales in China dropped precipitously during the initial South China Sea dust-up.

      • 0 avatar
        28-Cars-Later

        Thanks.

        • 0 avatar
          aquaticko

          Specifically, it’s in protestation of South Korea’s agreement to install the THAAD system, which China perceives as a threat to its coastal cities, and possible even Beijing. It’s ridiculous on every side.

          THAAD can’t reach China. Positioned where it is–in southwestern Gyeongsangbuk-do–it will provide almost no protection to Seoul, where most things which matter in South Korea are. China is widely perceived to be overplaying its hand in South Korea, where these antagonisms over THAAD seem like China attempting to exert control over South Korea’s foreign policy by using its leverage as Korea’s biggest export market to threaten economic damage by proxy. All it’s really doing is pushing South Korea, which had been cozying up to China throughout the previous administration, further into the US-Japan-S. Korea trilateral alliance.

          It’s all a lot of nonsense.

          That having been said, Hyundai should be desperate. They’ve still been unable–rightly or wrongly–to shake this second-rate image. They have no truly loyal customer base, no one who buys a Hyundai because it’s a Hyundai. They’ve done nothing to impress themselves on the world’s automotive consciousness. Their conservatism is going to kill them.

          • 0 avatar
            arach

            I disagree they haven’t started changing their image.

            The problem is that we did some significant research a number of years ago and determined it takes about 15 years to change your image in the automotive industry and build brand preference.

            Hyundai is doing the right thing, but they are overly eager. Its like trying to cook a steak in 30 seconds. You can’t do it unless you want it bleu.

            Hyundai’s demographics have expanded big time. In fact, only 50% of their buyers are “low income” where 10 years ago it was about 95%. They are stealing a decent amount of business from Honda and Toyota. In exchange, they are losing some of the low end buyers.

            Today its not unreasonable to see college educated professionals driving a hyundai. 10 years ago that didn’t happen.

            They’ve been unable to shake their image because they need more time. They have been doing the right things, they just failed to recognize how long it was going to take to do it.

    • 0 avatar
      TMA1

      The CCP’s near-total stranglehold on information in China has in recent years let them whip the Chinese population into a frenzy of nationalism and xenophobia that’s long been present in South Korea and Japan.

      Traditionally, I think China has been more regionalized the way the US was prior to the Civil War. They’ve also been more open to foreigners (it’s been said that anyone who invades or conquers China ends up being swallowed up by the country). I think both of those ideas are fading, as China takes more of a leadership role on the world stage. Whereas the common Chinese person has traditionally been focused on their immediate and extended family, the CCP is trying to replace that with a loyalty to country.

      So when the US, Japan, or South Korea do something that’s perceived as insulting or disrespectful, the media turns the common people against those countries. And conveniently, their products. Why buy a foreign car, when a BYD or Chery is a near carbon copy and keeps all the money at home?

      • 0 avatar
        slavuta

        China does about same thing we do. Cuban embargo, Russian sanctions, Iran…

      • 0 avatar
        28-Cars-Later

        “Why buy a foreign car, when a BYD or Chery is a near carbon copy and keeps all the money at home?”

        I ask the same question of Americans.

        • 0 avatar
          IBx1

          ““Why buy a foreign car, when a BYD or Chery is a near carbon copy and keeps all the money at home?”

          I ask the same question of Americans.”

          Because Chevy didn’t make the Civic, they made the Cavalier. Ford didn’t make the 4Runner, they made the Exploder. Dodge didn’t make anything that still runs today.

          • 0 avatar
            28-Cars-Later

            I highly doubt Chery or BYD product is superior to Hyundai in the PRCDM. Yet, apparently Chinese are buying domestic product.

          • 0 avatar
            Lorenzo

            Not True! I just saw a Dodge Neon yesterday!

          • 0 avatar
            arach

            Not True!! They made the Dodge Stealth, and that was a great car that lasted forever…

            oh right…

      • 0 avatar
        bd2

        It’s gotten so bad/petty that PRC state TV, CCTV, wouldn’t even show close-ups of a SK golfer during an LPGA tournament a few months ago.

        Xi is a hardcore, ultra-nationalist who has sharply put his foot down on any sort of dissent in China.

        There are reports of people investigating the labor practices of factories which make goods for Ivanka’s products having “disappeared.”

  • avatar
    Fred

    Branding is a marketer’s wet dream.

  • avatar
    JohnTaurus

    “In China, Hyundai products are often viewed as lesser automotive fare, positioned well below Japanese and American brands.”

    This is only the case in China?!

  • avatar

    “We are agonizing over how to source local parts… [of sufficiently consistent quality]”

    What he really meant to say. Not everything made in China is junk but sourcing stuff there is a crapshoot unless you have a real say in your supplier’s QC processes.

    It’s funny. I’m bringing a product to market and people who have no experience with industrial things often suggest having it made in China. People within industry consider China as a source of last resort. Shinola uses Chinese watch cases because that’s where watch cases are made. I’m using Chinese filament to 3D print my parts because I’ve determined, from use, that it prints better than the stuff I’ve gotten from American extruders. However, I’m glad that the potentiometers I’m using come from Taiwan, where there is more consistent quality than in China. The important stuff, btw, comes from California and Klingenthal, Germany. Of course, the most important part of the project, the idea, comes from Michigan.

  • avatar
    Whatnext

    Hmm, China has import tarrifs and yet President Dump would rather go after friends and allies. Why is that…?

    • 0 avatar
      RHD

      Because he is an arrogant, ignorant, clueless twit, as well as Putin’s puppet.

      • 0 avatar
        gtemnykh

        “as well as Putin’s puppet”

        Might want to unplug yourself from the fake news drip-feed friendo

        • 0 avatar
          derekson

          It’s not a conspiracy theory if they unsourced rumor comes from CNN!!!1!!

        • 0 avatar
          JimZ

          TIL all you have to do to disprove something is call it “fake news.”

        • 0 avatar
          Whatnext

          LOL, “Fake News”, don’t folks in the Sticks know that is so January 2017, when suckers actually thought Dump could handle being POTUS?

          • 0 avatar
            gtemnykh

            “don’t folks in the Sticks know that is so January 2017”

            Don’t smug coast dwellers realize this attitude lost them an election?

            And you realize calling the guy Dump/Drumpf/whatever else puts you in the same intellectual-bottom feeder category as all the “Obongo/Obummer/etc” people on the right? Let that sink in for a bit.

            “TIL all you have to do to disprove something is call it “fake news.””

            Jim do you have some particular insights and evidence to share with everyone as far as the purported collusion goes? Any hard evidence or facts? No? No one else does either it seems.

          • 0 avatar
            JimZ

            Funny how a Russian guy here is defending Trump against allegations of Russian collusion.

          • 0 avatar
            brenschluss

            HE’S A SPY!!

          • 0 avatar
            gtemnykh

            Yeah, my whole family voted for him, and just about all of Brighton Beach. Better fire up another investigation! Trump was playing the long game all along!

            I’ll repeat: still no hard evidence of any of this collusion that CNN is breathlessly babbling about.

            Priceless:
            youtu.be/O187J_ciq28

          • 0 avatar
            quaquaqua

            lololol did you seriously just call it the collusion that CNN is reporting on? Is your head that far in the sand? It’s collusion that has been reported on by CNN, HLN, MSNBC, ABC, CBS, NBC, New York Times, LA Times, Washington Post, Boston Globe… basically any major news outlet that isn’t Fox News or a conspiracy theory website. Which is hilarious because this is an ACTUAL conspiracy that is going to bury this president and, one can hope, the gutless Republicans who apologize and disagree with everything Trump does and yet still support him because they have no idea what to do except put their party before their country. It’s their motto, after all.

          • 0 avatar
            gtemnykh

            “reporting on”

            Funny how no one in the thread has yet to show a shred of actual evidence on the matter…

          • 0 avatar
            JimZ

            “youtu.be/O187J_ciq28”

            Fake news.

            See? I can do it too.

          • 0 avatar
            gtemnykh

            Still no evidence, nothing to refute what Sununu stated (ie CNN reporter was forced to admit she hasn’t seen any evidence either). Keep talking in circles Jim, it’s doing a whole lot of good.

          • 0 avatar
            JimZ

            Oh I didn’t realize I was supposed to be an investigative reporter.

            but go ahead, keep p!ssing on my head and trying to convince me it’s just raining.

          • 0 avatar
            gtemnykh

            “keep p!ssing on my head”

            In terms of leveling you in debate? I will gladly continue to do so.

          • 0 avatar
            JimZ

            “In terms of leveling you in debate? I will gladly continue to do so.”

            you’re like a pigeon playing chess. you knock over some pieces, sh!t on the board, and flit back to your flock claiming victory.

      • 0 avatar
        Sceptic

        And you have another seven and a half years to enjoy Trump’s presidency. Old time 60’s liberals missed the moment. Old style wishy-washy race baiting politics are out. Obama was the culmination, the hippie’s wet dream president.

        Please realize that America has changed. New generation, and especially immigrants who work, understand what America is all about. Talk is cheap as evidenced by Obama’s terrible 8 years in office. Now witness what real leadership is all about. Smooth sailing, Mr. Trump!

    • 0 avatar
      28-Cars-Later

      My challenge to you is to dig deeper before assuming anything. I think you will find there is no black and white, but many shades of grey.

      • 0 avatar
        Vulpine

        Regretfully, while I agree about the ‘shades of gray,’ politics has become a game of ‘black and white’; you’re either for a party or against it, there can be no middle ground. And THAT, specifically, is why American politics has gone down the toilet.

  • avatar
    Vulpine

    All Hands On Deck! Get that Santa Cruz out immediately! Our bottom line depends on it!

  • avatar
    bd2

    China is a problem – always thought it was stupid for H/K to have invested so much in China, esp. Hyundai which wanted to build a factory at a certain location, but the central govt. wouldn’t let them unless they built another factory at a diff. location first (so, Hyundai ended up building both in what was already a saturated market).

    H/K is better off expanding in markets not beholden to the whims of the central govt. – which is why Hyundai has been expanding its presence in India and Kia is planning on entering the market and building a plant there.

    Even tho having only entered the market about 2 yrs ago, Kia is on track to be the 6th or 7th best selling brand in Mexico and has been making gains in Australia and Europe – so it’s not all horrible news as things are going pretty well in other markets.

    But for the time being, China will be a drain as one of the worst things for an automaker’s bottom-line is to have its plants running below capacity.

    • 0 avatar
      Vulpine

      Remember, H-K belongs to mainland China now and has for about 20 years or so. It’s no longer a question of H-K ‘investing’ in China so much as China demanding the ‘investment.’

  • avatar
    Fred

    How the hell did Hyundai’s sales problems turn into a distopian trolling comment fest about Trump? Unsubscribe.


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