Desperate Times Lead Hyundai Into an All-Ideas-On-Deck Strategy

Amid stagnating U.S. sales, a crash-dive in China, and a product lineup not optimally suited for growth, Hyundai is furiously crafting a salvation plan.

In North America and other utility-loving countries, the strategy is clear: more crossovers and a significant product shakeup. The little Kona is already on the way, though perhaps not as quickly as Hyundai had hoped.

China, however, presents a serious problem for the automaker. What was supposed to be a growth market for the company has now turned into the opposite. Hyundai’s share of the market has shrunk to 5 percent from last year’s 8.1 percent, which was down from years past. In March alone, after news of South Korea’s installation of a U.S.-supplied anti-missile defense system, Hyundai and Kia sales dropped 52 percent.

Determined to make the Chinese fall back into love, the automaker has a plan brewing.

According to Reuters, step one will be the creation of a brand experience center in Beijing’s artsy-fartsy 798 Art District. The center, which Hyundai believes will help would-be buyers familiarize themselves with the brand, will open in September.

“We’re not going to show a real car,” a company executive told Reuters. “This space is only for focusing on brand building.”

In China, Hyundai products are often viewed as lesser automotive fare, positioned well below Japanese and American brands. The brand center will try to get across the message that Hyundais are not just for taxi drivers.

Step two is all about product, with a small, China-only model expected to appear in November, sources say. That unnamed model is slated for production at a Chinese factory. If the utility vehicle isn’t enough to get the brand noticed, the company is reportedly considering dangling its upcoming Kia Stinger sports sedan in front of status-chasing drivers.

The third step is more complicated. While Hyundai has always planned to bring its Genesis luxury brand to China, possibly as early as next year, the automaker is now considering building some models in that country. By shipping knock-down kits to China, Hyundai would be able to slash import tariffs and prevent its joint venture partner from getting its hands on Hyundai technology.

“We are agonizing over how to source local parts and secure enough sales to build the Genesis cars,” a Hyundai source told Reuters.

[Image: Genesis Motors]