Staff Reporters
Apr 3, 2013

Can Hyundai ever achieve premium status?

SOUTH KOREA - Hyundai is looking once again to shed its image as mid-range car manufacturer with a tie-up with Hermès, which it unveiled recently at the Seoul Motor Show.

The Hermès Hyundai Equus
The Hermès Hyundai Equus

The result of the initiative is three ultra-high-end Equus sedans (Equus being the brand's most premium model) with interiors by the luxury fasion label. The models are not for sale, but the company sees it as a move to improve brand perception. It is one part of a broad strategy that includes a major investment in advertising overseas.

The brand has been trying to move into the luxury car market for the past 10 years in order to fight growing competition at home from foreign brands after the government implemented free-trade agreements with Europe and the United States. In 2011, it also partnered with luxury fashion brand Prada to co-design a limited-edition line of Genesis sedans, but it only managed to sell a third of the 1,200 cars it had initially targeted. Is Hyundai's goal of becoming an internationally recognised luxury brand realistic?

Matthew Godfrey, president, Y&R Asia
This is a perennial problem within the automotive industry that many brands have found themselves faced with. Most have ended up with a multiple brand strategy. For example, Toyota launched luxury brand Lexus, and went to great lengths to ensure that Lexus was distanced from its parent; Nissan launched Infiniti; and Volkswagen Group brands include SEAT, Skoda, VW, Audi and Bentley.

Across the world, in Europe especially, sales of value-priced car brands are being squeezed, while more premium-priced brands are succeeding. And the next wave of ‘value’ brands from China will put even more pressure on Hyundai to move up the value chain, it would appear they have no other choice.

Hyundai has improved its product immensely over the past few years, both in terms of design and engineering. Indeed, both the i30 and the Equus are very good cars. But brand perception is still its problem. And, going by its previous attempt with Prada, this strategy of ‘prestige by association’ is not going to work. If I simply stood next to Brad Pitt, it wouldn’t make me any better looking—all it does is graphically illustrate the contrasting difference between us—and it’s the same for Hermès and Hyundai.

Hyundai needs a comprehensive overhaul of all its brand communications to reposition itself. It needs to look at sponsorship, motorsport, showrooms, after sales and communication in its entirety. There is no cheap or quick fix. Just ask Renault or Opel.

It should take inspiration from another Korean company, Samsung, and understand how it has moved up the value chain over the past 10 years.

 

Graham Hitchmough, regional director ASEAN, The Brand Union
It is easy to reject Hyundai’s hook-up with Hermès as a classic motor show publicity stunt and to dismiss its chances of ever being perceived as a luxury automotive brand, but that might be to underestimate Hyundai and evidence of a more robust strategy behind the showmanship.

Clearly no-one would expect Hyundai to suddenly be competing directly with the likes of Mercedes and BMW, but the link with Hermès—however improbable—still provides a statement of intent from the manufacturer and a sign of its undoubted progress. In the past decade, Hyundai has more than doubled its unit sales and is vying with Ford to be the world’s fourth biggest carmaker. It has also moved from being a purely volume player, focused on 'cheap and cheerful' family runabouts, to investing heavily in research and development and delivering genuinely good quality, stylish products such as the Equus and the Genesis that won Car of the Year in the US in 2009.

All of this has come as part of a management realisation that to move to the next stage of growth Hyundai needs to address its poor brand perception, and in the long term this can only be done if the product and the all-round brand experience are walking the walk of a more premium, desirable marque. Hyundai’s vision is to create “modern premium” motor vehicles, characterised by innovation and unique 'fluidic' styling, and this has already seen it make strong improvements in brand perception in the US.

The deal with Hermès is not therefore the whole story, but just an extreme example of a considered approach that is beginning to bear fruit. Certainly in the foreseeable future, Hyundai cannot hope to compete on a par with established luxury car brands, but by pursuing a number of concurrent strategies to raise its profile and brand perception in key markets such as South Korea, China and the US, it can start to position itself as an increasingly credible mass premium player. And as Hyundai’s compatriots Samsung are already proving, from there the leap to being a genuine luxury challenger brand is no longer quite so incredible.


Lawson Dixon, automotive business development professional
A premium automotive brand takes a lifetime or more to achieve. Toyota's are held up as examples of high quality, affordable, value for money vehicles––and even it saw the sense in creating a premium brand in Lexus, which was single-mindedly positioned as such so from it's very inception.

Credibility is built up over time. Creating a luxury brand requires a long-term investment in time and materials, marketing and positioning. Just calling something a luxury product doesn't necessarily make it one. Hyundai has come a long way from its 'cheap and cheerful' positioning and will no doubt continue to improve on its public perception––and good on it! But my own opinion is that it's a mistake to ignore what has made you famous: they are building a loyal following in much the same way the Japanese brands have done in past: they should continue to do so.

The mainstream Japanese brands launched Lexus, Infiniti, Acura etc in an effort to establish premium/luxury credentials, and this has paid dividends over the long term. I doubt that aligning with luxury brands will 'rub off' in the way that Hyundai would be hoping, I think it's a short-term solution.

In my opinion, it's unlikely that Hyundai will be able to move up as a luxury brand: Volkswagen has managed to move from being a cheap 'people's car' to being a reputed 'premium' (as opposed to 'luxury') brand in most markets, and this has taken many decades with a brand that has been obsessed with quality, having origins from a country that has undisputed 'automotive quality' credentials.

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