| SEOUL/BEIJING July 31
SEOUL/BEIJING July 31 South Korean automaker
Hyundai Motor is planning to launch a car made just
for China in early 2014 as it tries to regain momentum in the
world's biggest auto market, where it lost market share during
the first half of 2012.
According to two individuals with direct knowledge of the
car, Hyundai is shrinking the mid-size Sonata sedan to create
what one of the sources described as a "Sonata-lite".
The intent is to create a more affordable smaller car that
is still roomy and upscale enough for Chinese middle-class
buyers trying to trade up, many of whom are now replacing their
first cars, which tend to be small vehicles.
"With the car, we're trying to cope with a shift in China's
marketplace," one of the individuals said.
As income grows in China, people are more interested in
driving larger cars, he said.
But bigger cars come with bigger price tags and some car
buyers cannot afford to jump from a low-priced compact, which
costs from about 100,000 yuan for a global brand ($15,500), to a
Sonata sedan, which starts around 167,000 yuan and goes up to
250,000 yuan for the top-end model ($26,200-$39,200).
With the new car, Hyundai is in essence trying to create a
new segment that blends the roominess and upscale feel of a
mid-size vehicle with the frugality of compact cars, according
to one of the knowledgeable individuals.
Hyundai developed the car from the ground up, modifying
existing technology, and currently has no plans to sell it
elsewhere, he said.
Frank Ahrens, a Hyundai spokesman in Seoul, confirmed that
the company plans "to produce a new model sized between the
Sonata and the Elantra", but declined to provide details.
Hyundai's chief financial officer, Lee Won-hee, said during
an earnings call last week that a new plant Hyundai is preparing
to open in Beijing - its third in China - is slated to produce a
car slotted between its Elantra compact and the Sonata.
"The segment is seeing demand grow rapidly," Lee said.
The car's price tag has not been decided, but one clue can
be found in the choice of engine.
According to one of the knowledgeable people, the car is
likely to be powered by a 1.8-litre engine, as well as possibly
a 1.6-litre turbo-charged engine - both the kind of engines
typically used in smaller cars. In fact, the new car pulls many
of its key components from the Elantra, he said. The Sonata,
which is more expensive than the Elantra, is powered by
2.0-litre and 2.4-litre engines in China.
With the new car, Hyundai is emulating a strategy that rival
Nissan Motor used to create a hit with its Sylphy car,
which Nissan developed by morphing the Tiida, a compact car,
into a bigger car. Nissan recently launched the redesigned
Sylphy, which starts at 119,000 yuan ($18,700), and is aiming to
sell around 200,000 of them a year.
One of the individuals said Hyundai's new China-only car has
been designed to compete with the Sylphy.
"We're very wary of Nissan because it is performing
spectacularly recently," he said. "Ours will be better than the
Hyundai is eager for a new hit in China.
The company is gaining market share rapidly in the United
States and Europe, and until recently had been a stellar
performer in China too.
Hyundai is the fourth-best selling passenger car brand in
China so far this year, behind Volkswagen, Nissan and Toyota,
according to research firm LMC Automotive.
But its market share dipped to 5.65 percent at the end of
the first half of 2012, down from 5.89 percent at the end of
last year, according to LMC. Volkswagen, GM, Toyota Motor and
Nissan all gained ground, posting faster sales growth.