Hyundai Announces 2006 Sales Targets

Twenty years have passed since the first Korean car was exported to the U.S.

Now, the types of cars Korea exports are changing.

Hyundai no longer makes most of its U.S. export profits from small cars. In the U.S. market at least, medium and large cars are more popular.

Medium-size cars are the key to the U.S. export market-

Last year, Hyundai sold 116,300 Elantras, a compact car, in the U.S. The company expects to sell 106,000 Elantras this year. But it also expects to sell 172,000 Sonatas, a medium-size car, this year, up from 130,300 last year.

Hyundai is concentrating on marketing the Sonata because medium cars create higher value and American customers prefer larger cars.

In contrast, Hyundai plans to sell 41,000 India-made Atoz liter cars in Europe, up from 36,300 last year. This is due to the relatively small roads in European countries and higher European sensitivity to oil prices.

Hyundai is following a “made-to-order” sales strategy that considers customers’ tastes in different regions of the world.

Hyundai’s sales objective this year is 2,687,000 cars, of which 76.6 percent, or 2,059,000 cars, will be sold overseas. Last year, exports accounted for 75.6 percent or 1,767,000 of the company’s total car sales (2,337,000).

To increase overseas sales, Hyundai will focus on medium and large cars, and recreational vehicles (RV) in the U.S, while focusing on compact and subcompact cars in the European market.

In terms of U.S. market sales objectives, the Sonata, Grandeur, and other medium and large car models account for 38 percent (204,000 units), the highest proportion. Small cars and RVs make up 32 percent (170,000) and 30 percent (158,000), respectively.

This is the first time Hyundai has set higher sales objectives for medium and large cars since it first began exporting cars to the U.S. in 1986. It is starting to shift its brand image away from “small and cheap,” to “big and high-quality” in the U.S..

On the other hand, Hyundai’s key European market exports will consist of small cars and diesel models. In the first quarter of this year, Hyundai will release a diesel model of its new Verna in the European market, followed by Santa Fe and Sonata diesel versions.

Currency rate is an obstacle-

What concerns the Korean car industry the most is the foreign currency rate. A strong won leads to a decrease in sales. To counter this, Hyundai is planning to expand its overseas production.

Last year, the company produced 636,300 cars at overseas plants located in the U.S., Turkey, China, and India, and plans to produce 992,000 cars at overseas plants this year, an increase of 44.9 percent.

Hyundai’s Alabama plant will reach full production this year, and Hyundai’s India plant will increase production to 280,000 cars, up from 250,000 last year. The India plant will also add a third shift to its production line in the second quarter.

Hyundai will also expand its export market to Eastern Europe, the Middle East, Central America and Latin America, and will diversify its payment currency away from its current dollar-based system.

Sung-Won Joo swon@donga.com