Toyota's Recall may help Hyundai bypass Competitor in Car Sales, Reputation

By Automotive Staff | February 04, 2010
Life is a zero sum game. Whenever there is a winner, there's a loser and vice versa. Case in point: Hyundai and Toyota. The former seems to be a company that takes advantage of bad times or some other companies major blunders. Since the start of the so-called Great Recession, it significantly boosted its market share from 4.3 percent in 2008 to 5.2 percent the following year. And that’s during a time when the Detroit Three were losing market share. Hyundai also helped itself by using the weak Korean currency to garner additional profits that it used to heavily promote its vehicles. Now Toyota’s reputation for quality is taking a terrible hit just at the time when Hyundai has been emphasizing quality in its marketing campaigns. For example, Hyundai will be launching its new Sonata family sedan in March, and quality will be a major message of the marketing campaign. It is being reported that Hyundai will spend $160 million on the marketing of the Sonata alone just for this year. Finally, the new Sonata is widely believed to be targeting Toyota’s Camry, one of the eight models that have been swirled into this unintended acceleration fiasco. Sales and even production of the Camry have been suspended until a fix is found and applied. Auto pundits have been impressed with Hyundai’s improving quality. Apparently consumers are taking notice. And that means sales. According to a J.D. Power and Associates survey last year Hyundai was the top non-luxury brand for new cars in the U.S., selling 3.11 million vehicles worldwide last year. That’s up 11.7 percent over 2008. Net profit doubled to a record $2.56 billion in 2009. It actually beat out Toyota, Honda and Ford. Hyundai is not relenting. It has bought ad time for the Super Bowl and the Academy Awards and it is expected to spend big on marketing during the summer. And Hyundai also said that it will emphasize quality as it targets Camry and other family sedans. The company will also emphasize fuel efficiency, horsepower, amenities and price. As far as price is concerned, the Sonata will be offered at a very affordable $20,000. Some pundits, however, are saying that Hyundai is expanding too quickly. The company and its affiliate Kia have set a target to sell 5.4 million vehicles combined in 2010. That is an increase over the 4.64 million the two sold combined in 2009 and double the amount sold in 2000. Still, Hyundai is not expected to suffer any quality control problems as a result of its explosive expansion any time soon. For one thing, it is still a lot smaller than Toyota and it has fewer models and that means things are easier to control. Regardless of what some of the more reluctant pundits are saying, Hyundai execs wish to expand growth in the U.S. The company sold 435,000 vehicles here last year. That’s up 8.3 percent over 2008. Believe it or not, that was the biggest gain among major carmakers and it happen at a time when the overall market demand declined 21 percent. Hyundai is also one of those worldwide automakers who do not believe in discounts or cash incentives to try and get people to buy its cars. And in recent days Hyundai said that it will not change this policy just to take advantage of Toyota’s woes. Our take? As Toyota fights to build back its reputation, Hyundai will be right at its heels bragging how good it really is. via Newsfactor Business