Hyundai’s Clever Value-Driven Strategy Winning in the U.S. Market

While American carmakers are reeling from the current economic downturn, Korean carmakers, Hyundai and its affiliate Kia Motors are using the recession to their advantage, posting a whopping 47% sales increase year on year.

From the NY Times:

After years of struggling to prove to consumers than it was more than a second-tier brand, Hyundai Motor America and its affiliate, Kia Motor America, accounted for 8 percent of the new-vehicle market in the United States in August, more than Chrysler’s 7.4 percent. The company sold more than 60,000 vehicles last month as buyers rushed to take advantage of the government’s cash-for-clunkers program before its end.

http://www.nytimes.com/2009/09/22/business/global/22hyundai.html


Hyundai has come a long way since it entered the U.S. market in 1986. At the time, inexpensive product lines of Hyundai were known for poor quality. They have made an enormous effort to become a top player in the U.S. market. As a result, “Hyundai and its affiliate Kia Motors Corp now command a combined 7.5 percent market share, making them larger on that basis than Nissan Motor Co.”, according to Reuters. Washington Post reported on September 1st that “globally, the Hyundai-Kia Automotive Group has jumped to fourth in sales, climbing ahead of Ford this year, according to the Automotive News Data Center.”

Hyundai’s strategy for building technological competence symbolizes Korea’s technological capacity accumulation process in a way. They started as an assembler of Ford cars and surged to become a formidable automaker in the global market through intensive technological learning from foreign entities.

China has followed similar path to build their automobile production and design capabilities: for instance, China’s Shanghai Automotive bought Korea’s troubled Ssangyong, then abandoned it. Hyundai is well aware that the Chinese are catching up fast.

Hyundai has localized their production worldwide to serve local customers better. Over 50% of their sales were made with cars manufactured at their plant in Alabama. Kia is also reportedly setting up a new plant in Georgia.

Hyundai is turning the recession into a golden opportunity to expand their market share and step up their brand recognition. They have pursued aggressive marketing strategy for taking full advantage of the U.S. government’s cash for clunkers program.

Hyundai has provided customer with values of good quality and service for less money. Moreover, they are eager to build their brand identity as a first-tier company. They have promoted a pricey sedan, the Genesis which won North American Car of the Year at the Detroit auto show, claiming to be an alternative to Mercedes, Lexus and Cadillac.

Hyundai’s growth trajectory is quite similar to that of Samsung that is now regarded as a top-tier firm in the U.S. market. For Samsung, the Asian financial crisis was the turning point to make a leap from a cheap, hardly-known brand to a high-end contender in global IT market, as discussed in the previous posts.