Hyundai -- Yes, Hyundai -- Aims to Be New Badge of Luxury

'Modern Premium' Concept Will Guide Marketing Campaign Launching in March

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"Someday, I dream of buying a Hyundai."

You're unlikely to hear that statement if you eavesdrop on an automotive focus group, unless it's composed of people who are still driving Yugos.

Yet that's the image that Hyundai hopes to carve out for itself as "modern premium." The term is Hyundai-speak for the philosophy that will guide a full-throttle marketing campaign launching in March designed to create an emotional tie that binds buyers to the brand.

Hyundai, not satisfied with being a value-only proposition in the U.S. market and anxious about customers who view it as an alternative to brands such as Honda and Toyota, uses the catchphrase "aspirational."

"You've got the old definition of luxury, about exclusivity and more about status," said Jim Sanfilippo, CEO of Innocean, Hyundai's agency in Huntington Beach, Calif. Hyundai's vision is to "be more inclusive, rewarding people in terms of design, and more reflective of the economic climate," he said. "Maybe Tiffany was old luxury, and Apple is about style and function that justifies a price premium."

The aim is to supply that halo to the overall brand rather than spin off a nameplate, such as Toyota's Lexus. "We want to provide more than expected values and experiences to our customers across all segments, from small cars to luxury," said Wonhong Cho, Hyundai's chief marketing officer, based in Seoul.

Hyundai Santa Fe
Hyundai Santa Fe

Interestingly, the new "modern premium," while initially created by Innocean, could be carried out by another shop. Mr. Cho said that while the in-house legacy agency will handle the "first wave" early in 2012, "for the second campaign we haven't made any decisions." Hyundai "may be able to seek partnership opportunities with another agency," he added.

It's a striking statement coming from Korean headquarters, given that Innocean is part of the Hyundai conglomerate and that the automaker's North American chief, John Krafcik, has said that using Innocean is pretty much a mandate from the Seoul C-suite.

The move comes when Hyundai is on a high. In recent years, the company has hammered a value message with its "Assurance" powertrain warranty, a trade-in value guarantee and a job-loss protection plan that made it a friend of working people.

According to Automotive News Data Center, the Hyundai division alone accounted for 645,691 units sold in 2011, up 20% from 2010. The brand has had stellar success with its "fluidic sculpture" models, the Elantra and Sonata; a racy hit with the sporty, three-door Veloster; and a performance entry in the new Genesis. It's also preparing a fully revised bread-and-butter model, the Santa Fe SUV, for April.

But Mr. Cho said despite the Hyundai group's growth -- some of it at the expense of the Japanese, affected by last year's tsunami and earthquake -- he hears footsteps. "The Chinese, the Indian players, will be a threat to us in three years, in five years," he said. "We can still make a lot of improvements."

"Modern premium is a very serious subject around here," Mr. Sanfilippo said. "We're not the only [automaker] that wants to succeed up-market. That's where the margins are."

Hyundai has been leaning in this direction for several years. In late 2010 it fired its first volley into luxury car sweeps with the $60,000 Equus, designed to compete with Lexus and Acura and ruffle feathers at BMW. Its tagline was "New Thinking, New Possibilities." Mr. Cho insists that the car met sales targets, though according to Automotive News data, only 3,193 models were sold in the U.S. last year.

The company also pursued an attainable-luxury position for Sonata last year with a TV spot that showed cops eating caviar on their squad car and kids playing with a Louis Vuitton basketball. (That image got Hyundai in hot water with the design group for using the logo without permission.)

But the new push is more ambitious in trying to encompass the brand.

"It's a delicate dance they're doing," said Peter DeLorenzo, an industry maven who writes The Autoextremist blog. "The Koreans are always hungry to be somewhere they're not, and this is where they get in trouble. The Equus is a nice car, but it hasn't made substantial inroads in that market. The brand's consideration level is high, and they should try to maintain that."

A reinvention wouldn't be Hyundai's first reversal of fortune. Under Joel Ewanick, marketing chief from 2006 to 2010, and Goodby Silverstein & Partners, the brand launched its "Think About It "campaign, which stressed Hyundai's price, fuel economy and long warranties.

Recently hired VP-Marketing Steve Shannon is overseeing spending now. The Hyundai brand was supported with $233.1 million in measured media from January through October of last year, according to Kantar Media. Hyundai Motor America bought two spots during NBC's coming Super Bowl broadcast, as well as a 60-second commercial before the kickoff. Speculation is that at least one of the ads will focus on Hyundai's workforce in Alabama.

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