Broad Hyundai Brand May Befuddle Consumers, but Execs Are Confident It Can Work

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Hyundai is having trouble with slumping earnings, but the chiefs of the Korea-based carmaker may be more concerned for the long term about the brand’s squishy identity. As it has tried to stretch its marque from its initial positioning as an econobox maker to including luxury vehicles in its lineup, Hyundai has encountered difficulty in establishing a brand that can compete effectively in all of the segments that it now covers.

But even as Hyundai’s latest earnings report was middling, company executives promised that they’re tackling the brand challenge.

“We’ll redouble efforts to enhance Hyundai’s image as a provider of high-end and environmentally friendly automobiles,” Kim Yeung-tae, a Hyundai vice president, said during a conference call, according to the Wall Street Journal.[more]

Several obstacles remain before Hyundai can achieve a more comfortable brand identity. In the US, those challenges include manufacturing constraints that have kept the company from taking complete advantage of recent demand for its mainstream nameplates that compete well overall in fuel economy, design and amenities with both American and Japanese general-market brands.

Hyundai also has suffered from a series of large recalls and its admission last year that the company—as well as its sibling Kia brand—had overstated the fuel economy of more than one-third of the vehicles they sold in the US during the previous two years.

How far to stretch the brand remains Hyundai’s biggest long-term strategic consideration. No other major automaker in the US tries to cover as much of a price range with one brand as Hyundai does. “It needs to launch a separate premium brand like [Toyota’s] Lexus for its next leap on the brand-value ladder,” Cho Soo-hong, an auto analyst at Woori Investment, told the newspaper.

But Hyundai’s US chief, John Krafcik, and others have vowed that the company will not launch a separate marque, arguing that Hyundai can make its brand work broadly by steps such as ensuring a premium experience at its dealerships even for purchasers of its $34,000-and-up Genesis sport sedan and its $61,000-and-up Equus luxury sedan.

Certainly there’s confidence outside the company that, whatever brand-strategy path Hyundai forges, it will execute well. Sixty-three percent of auto-industry executives who participated in the just-released 2013 annual confidence survey by Booz & Co. said that Hyundai and Kia are likely to increase US-market share over the next five years, the highest confidence level registered by any brand.

It just isn’t clear yet how Hyundai is going to get there.

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