Hyundai: Brands In Demand

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Hyundai is hot.

The South Korean importer continues its breathtaking march up the sales charts, even without no-interest financing deals. Instead, the carmaker's growth can be traced to its value positioning, a broadening into new segments, a strong warranty program and a sharply increased ad budget.

Hyundai Motor America built its brand on the promise of affordable transportation. But a year ago, it entered the truck market by introducing its first sport utility, the Santa Fe, its priciest vehicle at the time. Hyundai also entered the higher-priced segment with the debut of its XG300, which it dubs a premium midsize sedan.

"We are becoming more acceptable to the mainstream," said Dave Weber, VP-marketing. That's reflected in its sales figures: Hyundai earlier this month reported it sold 346,235 vehicles in 2001, up 42% from the prior year. Hyundai's rise defies economic indicators, which have been slowing since July 2000. "Since that time, our sales have really built a lot of momentum," said Mr. Weber. "We have great-looking cars with a great value." Hyundai has freshened its lineup, with the last model makeover due for the 2003 Tiberon.

The ad plan for 2002 calls for creative aimed at instilling a "pride of ownership" feel, he said. The account may be in flux, however. Hyundai Motor Co. called a media review for Kia and Hyundai, now at Cordiant Communications Group's Bates Worldwide, that some believe could lead to a global creative consolidation. Bates USA West, Irvine, Calif., now handles Hyundai's U.S. creative. Kia's media is handled by Omnicom Group's OMD.

Hyundai has also beefed up ad spending, with $75 million in measured media in the first half of 2001 as compared to $58 million for the same period a year ago, as measured by Taylor Nelson Sofres' CMR.

Moreover, Hyundai's two new pricier models are drawing more educated, affluent buyers, Mr. Weber said. "We're moving the brand in the right direction."

Until recently, it was headed the other way. When Hyundai first bowed in the U.S. in 1986 with the tag "Cars that make sense" from Bates' predecessor, the marketer managed to carve out a decent niche. But over time, its quality fell and sales skidded.

Then, in fall 1998, Hyundai began advertising the industry's most aggressive warranty. "The freedom of America's best warranty," as it is now called, includes a 10-year powertrain warranty to original owners. The brand also altered its pricing and options packages for 1999 models; for several years before that, the brand sold by incentives. "We wanted to put value into the product," said Mr. Weber.

Steve Saxty, executive director of auto practice of Interpublic Group of Cos.' FutureBrand, said Hyundai "is no longer seen as the cheap option-buying a Korean car."

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