Having cracked the US, Hyundai now wants to take on Europe's established brands with the i40, writes MICHAEL McALEER
IN THE SOUTHERN US city of Montgomery, Alabama, the first capital of the old confederacy, the economic lifeblood is driven as much by decisions in Seoul as those in Washington DC.
While two of the three Detroit-based giants were being rescued from death’s door by government bailouts two years ago – Hyundai was gaining market share in the US and increasing staff numbers at their Montgomery production plant to cope with demand. According to the New York Times, nearly 2,700 locals are employed at the factory, with 138 supplier companies dotted around the city feeding its needs – 50 of which have located to the city from South Korea.
Last weekend marked 25 years since the Korean firm entered the US market. In the early years after its American arrival, Hyundai was considered as little more than the budget economy option. It went on to become the butt of jokes, with reliability issues badly damaging its reputation.
How things change. By 2004 it was tying with Honda in the JD Power initial brand quality surveys. In 2009 its Genesis family saloon – not sold in Europe – scooped the North American car of the year title. It’s now a fixture in the top 10 best-selling car marques in the US market, attracting customers not only with its competitive pricing but also its perceived quality.
Hyundai is now a mainstream brand proposition to US buyers. It’s been a remarkable case study of brand building and one it now hopes to replicate in the ultra-competitive European marketplace.
It’s not going to be an easy task. Whatever about offering a value proposition, Europe’s homegrown brands pride themselves on offering increasingly premium products to buyers.
Yet Hyundai is confident it can establish itself alongside the established brands, offering not just competitive prices but tempting premium cars. A new dawn beckons for the Korean brand.
Its first foray into this new era was the launch of its i range of cars and ix range of crossovers and SUVs. Models like the i30 compete directly with big-selling models like the Ford Focus and Toyota Auris. Its recently launched iX35 targets popular models like the Nissan Qashqai and Peugeot 3008.
Now comes arguably its most ambitious model to date: the i40, which aims to take on the established dominance of models like the Ford Mondeo, VW Passat and Toyota Avensis in the family car and fleet market. These cars have closed the gap with premium rivals and Hyundai intends to join the race with the front runners.
The new model is a world apart from Hyundai’s last foray into the saloon car market with the Sonata. Its styling is similar to the established rivals, with sleeker coupé-like styling for the front nose and roofline. Due to be officially unveiled in estate format next week, a saloon will be introduced in the autumn in time for the car’s arrival in Ireland.
Alongside this, Hyundai is set to introduce its new Veloster hot-hatch coupé later this year, a car that won plaudits when it was unveiled at last month’s Detroit motor show.
According to its European president CK Han, Hyundai is moving towards a “modern premium” position on the continent, providing consumers with high-end features and vehicle quality at accessible prices.
The firm’s European executives accept it will be a gradual change in the buyer’s perception, built on more than a couple of new models. Yet it has already introduced attractive offers such as its five-year triple care assurance scheme, comprising a five-year unlimited warranty, five years of roadside assistance and five years of vehicle health checks.
Similar incentives have worked extremely well in the US. As recession hit there, Hyundai offered an innovative safety net to owners: if you lose your job and can’t afford the repayments, simply hand back your new Hyundai and walk away debt free.
Attempts to get a similar scheme here failed, according to Stephen Gleeson, managing director of Hyundai Ireland, because they couldn’t get an insurance firm to underwrite it at a time when Irish unemployment levels were soaring. But he says the new five-year triple care offer is just as reassuring to Irish customers.
With new models on the way, the firm believes its new “modern premium” tagline will establish the brand in new car buyer’s minds. Given Hyundai’s track record to date, particularly in the US, you’d would be brave to bet against it.
Hyundai i40
The new i40 (pictured) is the Korean car firm’s rival to the likes of the Ford Mondeo, Toyota Avensis and VW Passat. It heralds the launch of a range of new offerings including the new Velostar, an innovatively formatted hot-hatch coupé, along with a major repositioning of the brand.
Initially revealed in estate format, a saloon will be unveiled in time for the car’s arrival in Ireland this autumn. Measuring in at 4.7 metres long in the estate, Hyundai claims the new i40 will deliver best-in-class dimensions for front head, shoulder, and leg room. Bootspace ranges from 553 litres with the rear seats up to 1,719 litres with them folded down.
It will be available with a 1.7-litre diesel putting out either 115bhp or 136bhp. When fitted with the firm’s Blue Drive Integrated Stop and Go (ISG) system, both power variants have emissions of less than 120g/km and thereby fall into band A in Ireland, with motor tax of just €104 a year.
The i40 will also be offered with petrol powertrains: a 1.6-litre 135bhp or a 2-litre 177bhp engine.
But in a segment where diesel models represent more than 75 per cent of total European sales, Hyundai is anticipating that its 1.7-litre diesel unit developing 136bhp will be the most popular engine among both private and fleet buyers.
The chassis is a revision of the underpinnings from other non-European models from the firm and will form the basis of a future Santa Fe replacement.
The car features full-electric steering, but while an active sport system to sharpen throttle response and steering was considered, it will not make it into the production models this time around.
