Focuses on Small Passenger Cars

Hyundai and Kia to upgrade small cars with stylish designs for youth car market

Hyundai Motor and Kia Motors will have to strengthen the competitive edge of their small cars to maintain their continuous growth amid the economic depression sweeping the world, Chairman Chung Mong-koo of the Hyundai-Kia Automotive Group said recently.
Chairman Chung, at a strategy meeting held at the automotive group's R&D center in southern Seoul, said the crisis triggered by the financial debacle should be turned into opportunities to reform corporate structure and make companies more competitive. He said the time has come to put the entire company behind the development of better economical cars in times of an economic downturn.
The chairman went on to say that the company should find its future growth engine in environmentally friendly cars and strengthen its competitive position with the development of fuel-saving, high-quality and deluxe small passenger cars.
He called for the close cooperation between the company's R&D units at home and abroad, and also an expansion of the capability of the company's overseas R&D units by hiring capable research staff.
Hyundai Motor plans to mass-produce the Avante model hybrid car fuelled by LPG from July next year and Sonata-class gasoline hybrid cars from 2010. The largest automaker in Korea also plans to produce hydrogen-driven electric cars from 2012 and, in 2013, plug-in hybrid cars that can be recharged at home.
Chung said small cars will be aimed at young car owners in their 20s and 30s, reflecting their preferences in cars including designs and gadgets. He especially called on the company's overseas R&D facilities to come up with stunning designs for cars aimed at the youth car market.
He also called for diversification of the company's car market, focusing on emerging market countries including India, Central and South America and Eastern Europe.
Chung said key words for the company's management are strengthening the competitive edge of its small cars; the development of environmentally friendly cars; revolutionary design for cars; and exploration of new car markets.
On investments in new technologies for next year, he said the company cannot afford to reduce investments just because the economy is not doing well, as it is a means to ensure the company's future growth.
"We have to continue to invest in R&D in order to develop technologies related to environmentally friendly vehicle technologies and other core technologies to build a base to secure a better standing in auto technology competition," the chairman declared.
He also said the number of research staff at the company's overseas R&D facilities will be maintained at the current level due to the uncertainty of the world economy and, instead, they will have to be run more effectively with the manpower resources they have now.
In the meantime, Hyundai Motor Co. is considering a revamp of its overseas operation system in the first half of next year, the company said.
The largest carmaker in Korea would consolidate its operations in the United States as a corporation with independent status, acting as the headquarters for the motor company's U.S. operations, including a car plant in the southern state of Alabama. The company has two subsidiaries in the U.S., one for marketing and the other for the production of cars.
The motor firm felt it had to do something in the wake of declining sales of its cars in the U.S. due to the sluggish economy. From January to September, the company sold 337,664 cars in the U.S., down 5.8 percent YoY, and for the year, the company projects its total car sales would be cut to 420,000 cars, down 8 percent from last year.
The operation rate of the Alabama car plant is down to 70 percent so far this year, with 40,000 cars in inventory at the plant. The plant was expected to produce 300,000 cars at the beginning of the year, but the figure was recently cut to 220,000.
In the meantime, the motor firm has all of its guns ready to fight some of the world's major carmakers in an effort to expand its share of the car market in China.
The automaker put on stream its second car plant in China in April, bringing the company's total annual car production to more than 1 million units, along with Kia Motors, its sister carmaker, which also has operations in the neighboring country.
China will be the largest car market in the near future with its population of 1.3 billion. The Korean automakers cannot afford to sit idly by and see the market dominated by other foreign carmakers as Korea is a next-door neighbor of China and maintains a long historical relationship with the emerging economic giant. nw

Hyundai Motor's new sedan on display at an international motor show early this year.