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Hyundai scales back growth goals in Europe
Tuesday, September 3, 2013
Hyundai scales back growth goals in Europe
Hyundai is scaling back its European growth ambitions for the time being due to the region's economic crisis, but the South Korean automaker has only postponed its mid-term goal, not abandoned it.
Hyundai now aims to increase its market share to 5 percent from 3.5 percent by the end of the decade instead of by 2015. If it achieves the target, Hyundai's share would be equal to that of the Citroen and Fiat brands.
Hyundai Europe Chief Operating Officer Allan Rushforth talked about the brand's goals with Automotive News Europe Managing Editor Paul McVeigh.
Do you think the European market will recover soon?
At the moment it's difficult to formulate a plan for the market but Germany is in a leadership position. I think the market will strengthen in the fourth quarter led by a return in consumer confidence in Germany after the country's general election [on Sept. 22].
Will Europe's market return to its record level of 2007?
The market may return to 17 million to 18 million at the end of the decade. There are trends such as the aging population that reduce car sales but at the same time there is growth in the A- [minicar] and B- [subcompact] segments. Vehicle taxation is increasingly important and has a direct impact on consumers' willingness to buy a car.
How badly has the region's downturn hit Hyundai?
Our sales are down but at a slower rate than the market. This year will be a year of consolidation for us. We aim to keep our market share at the 3.5 percent level we achieved in 2012 and to keep our European plants in the Czech Republic and Turkey operating at 100 percent capacity.
Your mid-term goal was to have a 5 percent share of the European market by 2015. Has that changed?
The European economy got in the way of that forecast. The market decline has been worse than we expected. We hope to achieve a 5 percent share by the end of the decade.
Can Hyundai keep growing in such a competitive market?
Up to now 80 percent of our sales have been conquest sales from the major European brands. In the future we plan to grow organically based on our products, design, value for money and quality. We will grow through gaining new business but not by pushing volume. For example, we will improve revenue from vehicle options and special editions. Beyond that we want to show that we are socially and environmentally responsible by emphasizing our BlueDrive strategy for fuel-efficient, environmentally friendly vehicles.
Is Hyundai profitable in Europe?
We are marginally profitable. We would like to be more profitable.
European brands such as Opel with the Mokka are entering the fast-growing subcompact SUV/crossover segment. Will Hyundai do the same?
It's an area we are looking at. There is no decision yet.
Europe's volumes brands such as Opel and Peugeot are moving upmarket. Is that a viable strategy?
It is easier to go down than up.
What is Hyundai doing to improve its brand image?
Our involvement in the World Rally Championship and next year's World Cup are key components to do this. We are opening a 5.5 million euro vehicle test center at the Nuerburgring racetrack in Germany. We expect that it will significantly contribute to enhancing the perception of the Hyundai brand. It shows our intention to focus on improving the customer experience of our vehicles, such as ride and handling, which is an important consideration for European drivers.
The EU's agreement with Korea to phase out the 10 percent import tariff on Korean cars led to fears that Korea would dump cars at lower prices on the European market. Was that a valid complaint?
I think it actually helped us. Many people were surprised to learn that 70 percent of cars sold in Europe are built in our factories in the Czech Republic and Turkey.
Hyundai improved its market share quickly to 3.5 percent from 1.8 percent in 2008. How was that done?
We made Europe a strategic priority and developed our business to become a truly European brand with our European headquarters and technical center in Germany and now our test center at the Nuerburgring track, as well as our factories in the Czech Republic and Turkey.
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