Hyundai changes the small car plan for China

2008 Hyundai Accent

BEIJING - Hyundai Motor Co. has adjusted the positioning of a small car to be launched in China. Instead of developing a model to win market share from Chinese carmakers, it has decided to launch one to compete with other international brands.



Hyundai's r&d center in South Korea was previously developing an entry level small car especially for China and India to compete with indigenous small car markers in these two markets.

But the company has lately altered the plan's part regarding the China market.

The small car was initially targeted at a range of $5,000-$6,000 two years ago.

But under the revised plan, it will be positioned between the Accent and the Elantra compact sedans in terms of pricing, says Jake Jang, a spokesman of Hyundai in South Korea.

In mid-July, the starting suggested retail price of the Accent in China is 71,800 yuan ($10,516), while the Elantra starts at 89,000 yuan ($13,039).

Hyundai changed its small car plan for cost considerations.

As production costs keep rising, Hyundai has realized it is difficult to compete with Chinese automakers on low cost cars without compromising product quality and brand image, says Jang.

Under Hyundai's plan, the small car will compete with the 1.4- and 1.6-liter Lova of Shanghai GM Dongyue Motors Co., the 1.3- and 1.6-liter Vios of Tianjin FAW Toyota Motor Co., says a supplier source close to the project.

In mid-July, the starting suggested retail prices of the Lova and the Vios are 74,900 yuan ($10,972) and 95,000 yuan ($13,917), respectively.

By contrast, prices of domestic models with similar sizes are much lower. For example, the Geely's Freedom Ship has a starting price of below 50,000 yuan ($7,325).

Production of the small car is slated to begin in 2010 in Beijing Hyundai Motor Co., a 50-50 joint venture between Hyundai Motor and Beijing Automotive Industry Holding Corp. (BAIC), says Jang.

Planned production volume of the model is more than 100,000 per year, says the supplier source. The car will be fitted with a 1.4-liter engine or a 1.6-liter engine. It will offer both four-door and five-door versions, he adds.

"The model will be produced in Hyundai's first plant in Beijing as a substitute for the Accent, which isn't selling well," says the Hyundai supplier source.

The Accent has two engine options: 1.4-liter and 1.6-liter. Sales of the Accent in 2007 slumped 37 percent to 26,665 units in China, according to Automotive Resources Asia, a unit of J. D. Power and Associates.

But a source at Hyundai's public relations office in South Korea says Beijing Hyundai will not cease producing the Accent after this new model is released.

Beijing Hyundai has started selecting suppliers for the new model, says a source with BAIC.

Beijing Hyundai expects to sell 380,000 vehicles in China in 2008. Its sales climbed 47 percent year-on-year to 164,793 in the first half of this year, according to figures released by the company.

Beijing Hyundai plans to launch a face-lifted Sonata NF sedan in the second half of this year and the i30 hatchback in the first half of 2009, says a spokesman of Beijing Hyundai.

[Source : Automotive News China ..Sub req.]