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Hyundai looks to luxury

Luxury leader: The HCD-7 concept car won't be built, but Hyundai will enter the luxury market.

Hyundai wants more sales and a premium image

27 Nov 2002

HYUNDAI is considering the establishment of a separate Lexus-like luxury division as part of its plan to increase worldwide sales and prestige.

The possible establishment of an upmarket nameplate ties in with an all-out assault the South Korean manufacturer is preparing on the medium and large passenger car segments in North America over the next few years.

Its goal with its subsidiary Kia is to achieve five million sales worldwide by 2008 and be a global top five player by 2010. Those figures include building US sales to one million by 2010, from around 388,000 this year.

That result would be a doubling of the Hyundai Group's 2001 global production, which was 2,548,393 vehicles.

"We are considering to set up a new division that would be like Lexus or Infiniti or Acura," president and chief executive officer of Hyundai Motor, Kim Dong-jin, told Australian media at the Seoul motor show last week. "But this has not been determined yet."In an interview with the Korea Herald he went further, describing the creation of an independent premium brand as "indispensable".

The luxury division is some time away, however, probably coinciding with the introduction of an all-new car to replace the conservative and ageing Equus, which is a domestic market model.

While a significant facelift of the Equus comes in 2003, the full-model replacement is not due until 2006. That car will be aimed at international markets and pitched directly at star cars like the Mercedes-Benz S-class, BMW 7 Series and Audi A8.

Considering that, it helps explain Hyundai's rationale for a possible luxury division.

Hyundai gave visitors to Seoul a taste of its future luxury vision with the first Korean showing of its V8 HCD-7 luxury sedan, which broke cover at the Chicago auto show this year.

But Mr Kim rejected any chance that the HCD-7 would be built: "That's the concept car, we have to consider economy. If we tried to build the concept car it is too expensive, we have to produce a value car."Value as well as quality were two key facets of the volume climb Hyundai Group was embarking on, he said.

Much North American volume will come courtesy of the replacement for the current EF Sonata which will be larger and built at the company's new plant in Montgomery, Alabama, which is due to be completed in 2005.

The new generation Santa Fe SUV will also be built at this plant.

"At this moment we are very strong in the small passenger car segment and less competitive in the upper-middle class," Mr Kim said.

"So we are going to put a lot of effort and investment into the upper-middle class car ... that's our main focus on improving the upper-middle class segment.

"The North American market is the biggest in the world, we have to be successful first in the North American market to become a global player - so the middle class segment is our main focus in the next five years.

"Our product is still not very (well) received by the customers in the middle class segment because they still believe Hyundai is an entry car manufacturer. But we are not just an entry car manufacturer now. We will introduce the value product in the middle class segment, that is the main focus."Mr Kim said quality was a cornerstone of all new product development now underway at Hyundai's Namyang technical centre.

"We focus the highest priority on the quality from the beginning of the design development phase," he said.

"If the bigger car is not supported by quality we cannot succeed, so when we develop the next generation vehicle for the North American market, the critical factor - the highest priority - is the quality."Hyundai Group will not increase its homeland production capability beyond the present three million, instead building a 500,000 capacity plant in Beijing, as well as investigating sites in South-East Asia, the Middle East, eastern Europe and South America.

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