GS69

http://www.cnn.com/2006/AUTOS/01/11/...eut/index.html

Toyota: Hyundai is a real threat in U.S.
By stealing Toyota's playbook, Korean automaker is making gains on the Japanese giant in the states.

January 11, 2006; Posted: 11:38 a.m. EST (1638 GMT)

DETROIT (Reuters) - Toyota Motor Corp., one of the world's most successful automakers, claims to be afraid of a lot of things: complacency, competition, and success itself.

But in the United States, rival Hyundai Motor Co. may well be at the top of Toyota's list.

"We're worried about them," Yukitoshi Funo, chairman of Toyota Motor Sales USA, told reporters in Detroit this week.

"Our main competitors here are essentially Honda Motor Co. Ltd., Nissan Motor Co. Ltd. and Hyundai, but Hyundai is the one we are very carefully watching," he said on the sidelines of the North American International Auto Show here.

South Korea's top automaker, until recently a target of jokes about broken-down parts, has dramatically raised its profile on the world stage with a benchmark study by research firm J.D. Power showing an improvement in quality to match the best Japanese brands.

Hyundai now sells far more cars than Volkswagen AG, Mazda Motor Corp. and Subaru in the U.S. It expects sales to rise more than 10 percent this year to over 500,000 units, in an overall market that it reckons will shrink.

In 2005, Hyundai's sales fell 7.7 percent to 418,615 units, giving it a market share of 2.5 percent.

"The quality story is resonating," Bob Cosmai, chief executive officer of Hyundai Motor America, told Reuters at the Detroit show.

"We're broadening the depth of our product line, and it's a great value story. When I joined the company at the end of 1990 we sold 90,000 cars, so we're making our presence really known."

Unveiling the remodeled Santa Fe sport utility vehicle at the show, Cosmai said its popular model would be priced "thousands of dollars" below a comparably equipped Toyota Highlander with six airbags, electronic stability control and other advanced safety features.

As Cosmai admits, Hyundai's path to success has been modeled closely on Toyota's strategy of striving for top quality and competitive prices, and appealing to a broad range of customers with wide-ranging cars.

That's what worries Toyota most.

"Honda and Nissan are also formidable rivals, but they have a distinct business approach and profile from us," Toyota's Funo said. "Hyundai, meanwhile, is essentially doing what we're doing."

But Funo added that Toyota would not and could not compete with Hyundai on prices, and would instead focus on building its brand and value.

"Our costs aren't as low as Hyundai's. We don't want to compete on their terms," he said.

His Hyundai counterpart, meanwhile, seemed to be adopting Toyota's characteristic modesty when asked how the South Korean company stacked up.

"I'm not sure anyone's a big threat to Toyota right now," Cosmai said.

"They're a very successful company," he said, adding that Hyundai benchmarked much of its processes and design characteristics around Toyota. "We have a long way to go."

More news and cars from the Detroit Auto Show

jrock65

Typo:

"In 2005, Hyundai's sales fell 7.7 percent to 418,615 units"

Hyundai 2005 sales stood at 455,012, up 8.7% from 2004.

PhilipMSPT

iTrader: (5)

This is the big "threat". Hyundai can offer bigger warranties and more reliable cars. They are not up to par with comfort and luxury, but sometimes the general public needs a reliable car that gets from Point A to Point B.

I think they may plateau in success because bigger automakers such as Toyota or Honda are offering more value commuter cars (such as Scions or the Civic), which matches Hyundai's prices and provides reliability and value.

rominl

iTrader: (4)

yup, just like what marshall has been saying a lot, hyundai is improving fast and growing at the same time. i am glad that toyota is takig them seriously. it's still some distance, but the growth is the problem. and i wonder if kia would be soon in the radar as well.

and btw, how funny it is that toyota treats nissan and honda as competition, but they care more about hyundai. doesn't that mean something

jrock65

As the Japanese yen keeps on losing value against the Korean won, I wonder if some of Hyundai's price advantage would start to erode?

The yen has depreciated by about 25% against the won in the past 2 years.

http://finance.yahoo.com/currency/co...KRW&amt=1&t=2y

STIG

It's a good thing that they are scared. They should and they better be. Hyudai is coming up really fast.

spwolf

this is pretty old... Toyota has respect of their competitors, you will never see them brag about themselves. This hyundai quote appears quite frequently...

Skulinex

Im very happy for hyundai for finally start to do things the way they were supposed to be a long time ago, yet somehow I get the feeling that it's a bubble about to get to its peak

bitkahuna

iTrader: (20)

What's going to be very ironic is when employees at Toyota's plants in the U.S. complain about 'unfair Hyundai imports'.

Toyota conceded in the article they can't compete with Hyundai on price but instead must compete on 'brand and value'.

Well you can't compete on value to a lower cost producer of similar products. As for brand, yes Toyota has a great brand, but many companies with great brands have had sales that got eroded over years (Xerox, Kodak, GM, Ford, to name a few).

And if Hyndai doesn't give Toyota fits, then China will in a few years.

bitkahuna

iTrader: (20)

Old? The comments were from the chairman of Toyota USA this week.

They certainly have the respect of their competitors as you say, but this wasn't about that, it's about them being worried about Hyundai who is coming on very strong. I'm seeing a LOT of new Sonatas on the roads where I live.

Which quote? Where?

Do you believe Toyota should be worried about Hyundai?

bitkahuna

iTrader: (20)

Why do you get that feeling?

spwolf

This has been repeated 5-6 times so far in past 3-4 months. They ask Toyota executive what do they think about Hyundai, and they say they are their competitors and that they are worried. I have seen it many times in 2005. Usually those articles are accompanied by an Hyundai executive boasting how they are the best quality brand (based on their 90 day survey report, and definetly not based on their depandability report) which did not happen this time.

I believe Toyota should be worried about EVERYTHING. And first and foremost of those worries is that they should be worried that they dont overprice their cars. New Avalon and Rav4 have addressed those worries (and Yaris in Europe), by offering a lot more of an car for no price increase. New Yaris in the US is better/lower priced than new Accent.

Sonata is cool, nice looking car. My worry for Hyundai is that they overprice their new cars. Sonata is up to Camry and Accord prices now, as result they offered incentives 3 months after brand new Sonata hit the market. Camry actually increased its market share on its last full year in market.

Hyundai is improving its cars at awesome rate - new Getz has been an hit in Europe from 2003, Sonata is next big thing in 2005. In 2006 Azera should sell well, as well as nice looking new Santa Fe. Accent should be nice and by the time they redesign Elantra, they will have full lineup of decent cars. Thats good starting point for next decade.

Personally, I do believe they are still one full step behind Toyota in cars and engineering. While they have improved a lot, so has Toyota. I work in dealership with both brands, so I deal with both of them on day to day basis.

A thing that has helped Hyundai a lot is that they are growing brand, which didnt utilize its full potential yet. They will reach its peak though, and then they will have to start having 5 year model life cycles. Another thing was protective home market which will weaken as years pass by. On the plus point, Hyundai still has many car markets to re-enter - vans, pickup, etc, etc, so there is a lot of growth in there.

Once again, only company that has its eyes wide open can survive. I really want toyota to be worried on all fronts - engineering, value, brand image, design, etc, etc. Just look at VW, 3 years ago, it was most prospective company on the market, an leader that everyone aspired to be alike, and few misses have turned that into complete opposite story - stuggling car maker, trying hard to maintain its market share and slipping brand image.

mmarshall

Hyundai has become the equal of Toyota and Honda in some areas...not yet in others. In general, it's hard to tell the difference now in assembly quality and fit-and-finish between the average Hyundai product and the average Toyota or Honda. Hyundai still has lower prices, a much longer warranty, and generally higher standard equipment.....but that advantage is narrowing on both counts as Hyundai prices creep upward.
The main Toyota-Honda advantages over Hyundai today still seem to be in powertrain engineering and chassis refinement / noise isolation. Hyundai engines and transmissions, while getting better all the time, still trail somewhat in both horsepower and gas mileage efficlency ( although the new Azera's is the best Hyundai powertrain yet ) and, of course, they lack the hybrid engineering and advanced features that Toyota and Honda engines both provide. Hyundai also needs to start putting better noise isolation in the body and chassis. I was quite impressed with just about everything in the new 2006 Sonata and 2006 Azera ( see my reviews of both ) except the road noise level.

bizzy928

I think that is great news. It shows Toyota is very aware of the competition. Competition is great for us consumers

Gojirra99

I ' ve heard quite a while ago that Toyota always think & behave as if they are always behind, whether they actually are or not. That's a good thing & I hope it stays that way.