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Hyundai Struggles as New Vehicle Market Changes

Sales continue to fall as maker awaits new crossovers.

by on Jul.19, 2017

Hyundai is a latecomer to the SUV and crossover over party, but the 2018 Kona aims to help remedy that problem.

One automaker under pressure from the shift away from cars is Hyundai, which has watched its sales tumble as the shift from passenger cars to utility vehicles and trucks has undercut its sales momentum this year.

Mike O’Brien, Hyundai vice president of corporate and digital product planning and development, noted Hyundai sales dropped significantly during May and June as the company elected to reduce sales to rental fleets.

Beyond the Headlines!

The sales drop followed a steady increase in Hyundai sales that reached all the way back to the 2008-2009 recession when the South Korean automaker’s sales took off, beginning a long period of growth. The steady increases in sales continued through 2016 when the company set a sales record, O’Brien said.

So far this year, Hyundai sales in the U.S. are down 7.4% and dropped by 19.3% last month. Passenger car sales, which account for nearly two-thirds of Hyundai’s U.S. sales are down 14.3% so far this year and dropped by 23.9% in June.

(Hyundai kills Azera sedan as it expands utility offerings. Click Here for the story.)

O’Brien said besides the ongoing shift on consumer preferences, which have had an impact on Hyundai sales, the Korean automaker also has backed off from fleet sales. When industry sales were strong in ’15 and ’16, rental fleets were willing to pay for new passenger cars. “It was good business,” he said.

In order to give sales of the Sonata a boost, Hyundai gave it a midcycle redesign, which it debuted in South Korea.

With inventories of unsold vehicles increasing this year, rental companies have reduced what they are willing to pay for new vehicles and Hyundai has reduced its deliveries to rental fleets. However, Hyundai retail sales to individual customers are so far this year, increasing by roughly 1.3%.

Overall, the industry remains healthy and relatively stable, he said.

(Click Here for a first look at the upcoming 2018 Hyundai Kona.)

O’Brien also said Hyundai isn’t about to give up on the passenger cars. Two cars, the midsized Sonata and compact Elantra, still account for almost half the company’s sales in the U.S. For 2018, the Sonata has undergone an extensive mid-cycle refresh. The updated version of the Sonata will go on sale this summer.

Hyundai is adding additional models to the Elantra line, such as the 2018 Elantra GT hatchback, which comes to the U.S. with European-inspired styling and driving dynamics as well as more space and more features. When the new hatchback arrives in showrooms buyers can choose between a GT version or the more powerful and GT Sport.

O’Brien added Hyundai believes that many buyers are willing to look at cars even if the market seem to have turned towards SUVs and trucks.

(Hyundai rushes revised Sonata to market. Click Here for the story.)

For many buyers, passenger cars still offer better fuel economy, better value, better driving dynamics and ride character as well as stronger exterior designs. “There is movement back and forth” between the segments, he said.

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