| SEOUL, April 2
SEOUL, April 2 Hyundai Motor is
developing a new luxury sedan for the South Korean market to win
back customers who have switched to imported premium auto
brands, according to a person with direct knowledge of the
The new model could be on sale as early as later this year,
the person said. Codenamed 'AG', the new car will be aimed at
more conservative, middle-aged buyers who have been turned off
by other Hyundai designs that have targeted younger consumers.
The move reflects growing concern at Hyundai, the world's
fifth-biggest auto maker by sales along with affiliate Kia
Motors, over its sliding share in the domestic
market where it sells 14 percent of its vehicles.
Boosted by import tariff reductions that make their cars
cheaper, brands like Germany's Volkswagen, BMW
and Mercedes-Benz posted double-digit sales growth in
2013, while Hyundai's sales slipped 4 percent.
The new sedan's arrival comes after Hyundai revamped its
mid-sized Sonata and larger Genesis model, also both sedans.
It's bidding to recover lost ground in the mid-sized and larger
car segment, which accounts for 60 percent of its domestic
The 'AG' will be made on the platform used to build
Hyundai's large Grandeur sedan, sold as Azera in the United
States, but will be bigger still, the person told Reuters. The
person asked not to be named because the plan remains
The model is aimed at extending Hyundai's line-up of premium
cars, the segment where foreign brands are making big inroads in
"The 'AG' will fill the gap between the Grandeur and Genesis
sedan ... This is a much-needed car for Hyundai to ward off
growing competition from imports," the person said.
Hyundai may sell the car in the low-to-mid 40 million won
($37,800) price range, similar to models such as Mercedes-Benz
C-Class, Audi A4 and BMW 3 Series, the person said.
"The 'AG' has a more conservative design than the newly
introduced Genesis and is largely aimed at appealing to the
middle-aged consumer groups, because some of them have been
quite discontent with the design of the Grandeur," the person
said. The Grandeur's emphasis on sleek styling appealed more
younger consumers, the person said.
A Hyundai Motor spokesman declined to comment. Local media
reports said the 'AG' will be unveiled at an auto show in the
South Korean port city of Busan in late May.
An organizer for the auto show said Hyundai plans to show
three new cars, but declined to comment on whether they are
brand-new models or face-lifted versions of existing cars.
Along with Japan, South Korea is one of the few markets
dominated by domestic carmakers. But Korea has emerged as a new
growth market for popular foreign brands in recent years
following a series of trade deals that cut import tariffs.
Imported cars had a combined market share of 14 percent in
February, up from just 2 percent a decade ago. Executives at
foreign auto companies have said their combined market share
should grow to around 20 percent in the coming years.
That would be double the share that foreign brands have had
in Japan for the past several decades.
Reflecting the potential growth opportunity, top-selling
foreign brands are boosting their exhibition space significantly
at the Busan auto show, which kicks off on May 30 and is
expected to be the largest edition of the show in its
Volkswagen has nearly doubled its exhibition space to 1,500
square meters, while Japanese and U.S. carmakers also expanded
their exhibition floorspace.
By comparison, Hyundai trimmed its stand to 2,950 square
metres from 3,050 square metres last time.
($1 = 1058.6500 Korean won)
(Additional reporting by Norihiko Shirouzu in BEIJING; Editing
by Kenneth Maxwell)