* Previous branding effort with Prada flopped
* Korean carmaker trying to shed value-for-money image
* Hyundai trying to compete at home against BMW, Mercedes
By Hyunjoo Jin
SEOUL, March 28 South Korean carmaker Hyundai
Motor Co hopes a touch of Hermes will make its
priciest sedan as desirable as the French retailer's exclusive
handbags and catapult its cachet into the same league as luxury
Hyundai Motor Group ranks fifth among the world's
top-selling cars, but the company wants to shed its
value-for-money image and start charging premium prices to
counter growing competition at home from BMW, Audi
and Mercedes as well as mid-range models by
rivals such as Ford Motor Co.
Hermes, makers of the coveted Birkin and Kelly
handbags that start at around $9,000, remade the interior of
three, not-for-sale Equus models that will be showcased at the
Seoul motor show from Thursday. The tie-up comes two years after
an attempt to sell Prada-designed cars failed to draw customers.
"The model is aimed at improving brand image," Cho Won-hong,
Hyundai's chief marketing officer, told reporters. Luxury group
LVMH owns a stake in Hermes, which used its signature
leather and equestrian-inspired logo in the Equus, named after
the Latin word for horse.
Hyundai and affiliate Kia Motors Co are fighting
to maintain market share after the government implemented
free-trade agreements with Europe and the United States. Imports
accounted for 10.1 percent of car sales in South Korea in 2012,
about 10 times more than a decade ago.
LUXURY BY ASSOCIATION
In 2011, Hyundai commissioned Italian luxury fashion house
Prada SpA to co-design a limited-edition line of
Genesis sedans intended to compete with Mercedes and BMW in its
affluent home market.
The initiative flopped. Hyundai sold just a third of the
1,200 cars it had initially targeted, highlighting the depth of
what the company itself calls an image problem.
Hyundai's own research shows that even more consumers would
flock to buy popular models like the i30 hatchback if only it
were made by a different carmaker.
"The Hyundai brand does not have a prestige perception,"
said Jack Trout, head of global marketing strategy firm Trout &
Partners. "Adding Hermes and Prada to their cars doesn't solve
this basic problem."
Hyundai may be able to fix its branding issues by parcelling
out premium offerings in a similar fashion to what Toyota Motor
Corp has done with its Lexus brand, Trout said.
Japan's Nissan Motor Co Ltd and Honda Motor Co
have also tried to do the same with up-market brands.
Hyundai has however, rejected this approach, saying premium
brands created by mass market automakers fail to replicate the
success of traditional luxury brands.
"We have concluded that we can do it with only Hyundai
brand," said Cho.
In addition to courting established luxury labels, Hyundai's
rebranding initiative, led by heir apparent and Vice Chairman
Chung Eui-sun, includes a plan to double advertising in Europe
to an estimated 630 million euros ($821 million) and a revamp of
its showroom in Gangnam, the affluent Seoul neighbourhood.
The tie-up with Prada "significantly" helped to raise
Hyundai's brand image, Cho said. Analysts are more sceptical.
"You cannot offer upmarket prestige with a downmarket brand
no matter how fancy you make it," Trout said.