Hyundai wants to get into truck sales with RAM pickup
05-13-10, 05:36 AM
#1
Hyundai wants to get into truck sales with RAM pickup
http://money.cnn.com/news/newsfeeds/..._N11110345.htm
DEALTALK-Hyundai has eyed truck and Chrysler tie-up-sources
By Soyoung Kim and Kim Yeon-hee
DETROIT/SEOUL (Reuters) - Hyundai Motor Co has floated plans to enter the high-stakes U.S. pickup truck market and proposed a partnership with Chrysler Group LLC, three people with knowledge of the process said.
As one option, Hyundai made a proposal to Chrysler earlier this year under which the U.S. automaker would build a truck for Hyundai based on Chrysler's Ram truck platform, according to two of the sources.
Such a tie-up would take the place of a now-scuttled alliance between Chrysler and Nissan Motor Co Ltd and could allow Chrysler to expand production and reduce costs for Ram, the No. 3 ranking pickup truck brand by sales.
Chrysler Chief Executive Sergio Marchionne rebuffed Hyundai's initial approach in February, according to the sources, saying the automaker needs to focus on its established turnaround plans under Fiat SpA.
But Hyundai continues to look at truck options and could come back to Chrysler, according to two of those with knowledge of the talks, who were not authorized to discuss the matter because the closed-door discussions were preliminary.
"We never say never; however, at this stage, pickup trucks are not high on our priority list," Hyundai Motor America spokesman Dan Bedore said.
Chrysler spokesman Gualberto Ranieri had no comment.
The quiet contacts between Hyundai and Chrysler this year underscore both the growth ambitions of the South Korean automaker and the nagging doubts over whether Chrysler will undergo a further transformation a year after its restructuring in a U.S.-government funded bankruptcy proceeding, analysts say.
For Hyundai, entering the U.S. pickup truck market would mean a bet on a high-margin but fiercely competitive segment where both Nissan and Toyota Motor Corp have failed to break the dominance of Detroit automakers.
Around the time that it made its pitch to Chrysler, Hyundai also showed a focus group in California a picture of a Ram-derived truck with a Hyundai badge to judge the reaction of potential customers, according to one of the sources.
Hyundai executives have also had meetings with representatives of its 800 U.S. dealers in recent months at which the topic of an expanded product offering -- including a potential Hyundai pickup truck -- was discussed, a person who joined those meetings said.
Dealers were enthusiastic in their support of a competitively priced pickup truck, the person said. It was not clear how consumers reacted.
WIN-WIN?
The long-running success of Ford Motor Co's F-series truck -- America's top-selling vehicle -- shows that Hyundai cannot walk away from the U.S. truck market, said Park Sang-won, analyst at Eugene Investment & Securities in Seoul.
"From Hyundai's perspective, it could make use of Chrysler's idle capacity, instead of putting in its own money from the beginning. That would be a win-win strategy for both Hyundai and Chrysler," he said.
While sales of full-size pickup trucks have taken a hit in recent years, the market still represents almost 11 percent of overall light vehicle sales and is expected to recover as a recovery in U.S. housing construction gathers pace.
In addition, pickups remain a lucrative stronghold for Detroit automakers, including Chrysler. Sales of a new heavy-duty Ram helped Chrysler surprise analysts by posting a first-quarter operating profit, Marchionne told analysts Monday.
Some analysts have said Marchionne's Chrysler plans could evolve and have questioned how it could continue to support all four of its brands -- Chrysler, Dodge, Jeep and Ram -- at less than 10 percent U.S. market share.
"We remain unconvinced Chrysler will survive in its current form despite Marchionne's blood, sweat and tears," Bernstein Research analyst Max Warburton said in an April report.
"A slimming down of Chrysler to be just Ram, Jeep and a U.S. production base for Fiat looks a realistic exit strategy to us," he said.
Hyundai would benefit from hitching itself to a known truck brand rather than trying to go toe-to-toe with a new offering against segment leaders Ford, General Motors Co and Chrysler, IHS Global Insight analyst George Magliano said.
That would allow Hyundai to avoid the missteps Toyota and Nissan made, he said.
U.S. pickup truck buyers, many of whom use the vehicles for work, are known for being fiercely loyal to their favored brands. Despite a high-profile push with its Tundra, Toyota still sold only one-fifth the number of full-size pickup trucks last year that GM and Ford sold.
"They won't get into the truck business the way that Nissan or Toyota did," Magliano said of Nissan. "How many times has Toyota gone through the truck effort and they are still not there."
In 2008, Chrysler and Nissan unveiled a production alliance under which Nissan was expected to build a small car for Chrysler and Chrysler would build a Ram-based pickup for Nissan.
That deal unraveled last year after Fiat moved to take control of Chrysler.
Hyundai and Chrysler were partners in a Michigan-based engine plant joint venture before Fiat took control. In addition, Hyundai had been one of the automakers Chrysler's former owner, Cerberus Capital Management, had approached about potential partnerships in 2008 and early 2009, according to Chrysler executives at the time. (Additional reporting by Kevin Krolicki and Bernie Woodall in Detroit, editing by Gerald E. McCormick)
DEALTALK-Hyundai has eyed truck and Chrysler tie-up-sources
By Soyoung Kim and Kim Yeon-hee
DETROIT/SEOUL (Reuters) - Hyundai Motor Co has floated plans to enter the high-stakes U.S. pickup truck market and proposed a partnership with Chrysler Group LLC, three people with knowledge of the process said.
As one option, Hyundai made a proposal to Chrysler earlier this year under which the U.S. automaker would build a truck for Hyundai based on Chrysler's Ram truck platform, according to two of the sources.
Such a tie-up would take the place of a now-scuttled alliance between Chrysler and Nissan Motor Co Ltd and could allow Chrysler to expand production and reduce costs for Ram, the No. 3 ranking pickup truck brand by sales.
Chrysler Chief Executive Sergio Marchionne rebuffed Hyundai's initial approach in February, according to the sources, saying the automaker needs to focus on its established turnaround plans under Fiat SpA.
But Hyundai continues to look at truck options and could come back to Chrysler, according to two of those with knowledge of the talks, who were not authorized to discuss the matter because the closed-door discussions were preliminary.
"We never say never; however, at this stage, pickup trucks are not high on our priority list," Hyundai Motor America spokesman Dan Bedore said.
Chrysler spokesman Gualberto Ranieri had no comment.
The quiet contacts between Hyundai and Chrysler this year underscore both the growth ambitions of the South Korean automaker and the nagging doubts over whether Chrysler will undergo a further transformation a year after its restructuring in a U.S.-government funded bankruptcy proceeding, analysts say.
For Hyundai, entering the U.S. pickup truck market would mean a bet on a high-margin but fiercely competitive segment where both Nissan and Toyota Motor Corp have failed to break the dominance of Detroit automakers.
Around the time that it made its pitch to Chrysler, Hyundai also showed a focus group in California a picture of a Ram-derived truck with a Hyundai badge to judge the reaction of potential customers, according to one of the sources.
Hyundai executives have also had meetings with representatives of its 800 U.S. dealers in recent months at which the topic of an expanded product offering -- including a potential Hyundai pickup truck -- was discussed, a person who joined those meetings said.
Dealers were enthusiastic in their support of a competitively priced pickup truck, the person said. It was not clear how consumers reacted.
WIN-WIN?
The long-running success of Ford Motor Co's F-series truck -- America's top-selling vehicle -- shows that Hyundai cannot walk away from the U.S. truck market, said Park Sang-won, analyst at Eugene Investment & Securities in Seoul.
"From Hyundai's perspective, it could make use of Chrysler's idle capacity, instead of putting in its own money from the beginning. That would be a win-win strategy for both Hyundai and Chrysler," he said.
While sales of full-size pickup trucks have taken a hit in recent years, the market still represents almost 11 percent of overall light vehicle sales and is expected to recover as a recovery in U.S. housing construction gathers pace.
In addition, pickups remain a lucrative stronghold for Detroit automakers, including Chrysler. Sales of a new heavy-duty Ram helped Chrysler surprise analysts by posting a first-quarter operating profit, Marchionne told analysts Monday.
Some analysts have said Marchionne's Chrysler plans could evolve and have questioned how it could continue to support all four of its brands -- Chrysler, Dodge, Jeep and Ram -- at less than 10 percent U.S. market share.
"We remain unconvinced Chrysler will survive in its current form despite Marchionne's blood, sweat and tears," Bernstein Research analyst Max Warburton said in an April report.
"A slimming down of Chrysler to be just Ram, Jeep and a U.S. production base for Fiat looks a realistic exit strategy to us," he said.
Hyundai would benefit from hitching itself to a known truck brand rather than trying to go toe-to-toe with a new offering against segment leaders Ford, General Motors Co and Chrysler, IHS Global Insight analyst George Magliano said.
That would allow Hyundai to avoid the missteps Toyota and Nissan made, he said.
U.S. pickup truck buyers, many of whom use the vehicles for work, are known for being fiercely loyal to their favored brands. Despite a high-profile push with its Tundra, Toyota still sold only one-fifth the number of full-size pickup trucks last year that GM and Ford sold.
"They won't get into the truck business the way that Nissan or Toyota did," Magliano said of Nissan. "How many times has Toyota gone through the truck effort and they are still not there."
In 2008, Chrysler and Nissan unveiled a production alliance under which Nissan was expected to build a small car for Chrysler and Chrysler would build a Ram-based pickup for Nissan.
That deal unraveled last year after Fiat moved to take control of Chrysler.
Hyundai and Chrysler were partners in a Michigan-based engine plant joint venture before Fiat took control. In addition, Hyundai had been one of the automakers Chrysler's former owner, Cerberus Capital Management, had approached about potential partnerships in 2008 and early 2009, according to Chrysler executives at the time. (Additional reporting by Kevin Krolicki and Bernie Woodall in Detroit, editing by Gerald E. McCormick)
05-13-10, 06:29 AM
#3
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Interesting, but I'm no to sure what to think at this point without more details.
Ultimately they're talking about a Ram with a restyled front end and a slanted "H" slapped on it?
I've become a big fan of Hyundai, but sorry, this isn't going to work. If Toyota can't break through domestic truck sales with it's excellent Tundra, then Hyundai, and frankly, nobody else will be able to. Nissan and Honda are still much more respected by the general public than Hyundai, and they can't sell trucks to save their lives. Toyota, the world's largest automaker and revered for superior quality still can't convince a majority of domestic truck loyalists to jump ship.
Even though it would be a Ram underneath, that won't help it sell when it says "Hyundai" on it.
Ultimately they're talking about a Ram with a restyled front end and a slanted "H" slapped on it?
I've become a big fan of Hyundai, but sorry, this isn't going to work. If Toyota can't break through domestic truck sales with it's excellent Tundra, then Hyundai, and frankly, nobody else will be able to. Nissan and Honda are still much more respected by the general public than Hyundai, and they can't sell trucks to save their lives. Toyota, the world's largest automaker and revered for superior quality still can't convince a majority of domestic truck loyalists to jump ship.
Even though it would be a Ram underneath, that won't help it sell when it says "Hyundai" on it.
05-13-10, 06:37 AM
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That's what bothers me about Hyundai's claims. Without trucks, Hyundai is not a "full line" automaker. Tesla could call the themselves the most fuel efficient automaker too.
That's why you have to compare model to model. And look at what the automaker offers. Hyundai has nothing close to the Prius on the efficiency side. Or anything like the Tundra/Sequoia on the full size truck side.
05-13-10, 08:14 AM
#5
Lexus Fanatic
"If it ain't broke, don't fix it".
Hyundai doesn't NEED to get into the pickup market. They are doing just fine without pickups, and have risen to become one of the world's most successful automakers. In fact, if they don't get into it, that will leave more company money and resources open for what they DO best...cars and SUVs. (Though, to be honest, there are some things about their 2011 car line that don't impress me)
Hyundai doesn't NEED to get into the pickup market. They are doing just fine without pickups, and have risen to become one of the world's most successful automakers. In fact, if they don't get into it, that will leave more company money and resources open for what they DO best...cars and SUVs. (Though, to be honest, there are some things about their 2011 car line that don't impress me)
Last edited by mmarshall; 05-13-10 at 08:17 AM.
05-13-10, 08:45 AM
#6
Per Hyundai's latest press release:
"Hyundai Motor Co. denies that there are any current plans to bring a pickup truck of any type into the U.S. now or in the foreseeable future. Hyundai is not in discussion with Chrysler in regard to a selling a rebadged Chrysler Corp. pickup truck, or any other vehicle, in the U.S."
"Hyundai Motor Co. denies that there are any current plans to bring a pickup truck of any type into the U.S. now or in the foreseeable future. Hyundai is not in discussion with Chrysler in regard to a selling a rebadged Chrysler Corp. pickup truck, or any other vehicle, in the U.S."
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05-13-10, 04:39 PM
#8
Lexus Fanatic
There's already a LOT of small-to-mid-sized trucks available in the American market, and none of them, as you point out, seem to either dominate the compact-truck market or sell in the huge numbers that the F-150 and Silverado do. I think that's because most truck buyers (or at least the clear majority) want the heft and payload that only full-size trucks can provide. Also, some of the smaller trucks (the Colorado/Canyon are probably the best examples) show markedly low quality in both design and materials, which indicates some neglect and indifference on the part of the manufacturers. And the Ford Ranger, which is reasonably well-built, is quite dated and probably in need of replacement.
Last edited by mmarshall; 05-13-10 at 04:43 PM.
05-13-10, 04:45 PM
#9
Lexus Fanatic
There's already a LOT of small-to-mid-sized trucks available in the American market, and none of them, as you point out, seem to either dominate the compact-truck market or sell in the huge numbers that the F-150 and Silverado do. I think that's because most truck buyers (or at least the clear majority) want the heft and payload that only full-size trucks can provide.
Yes, the Ford Ranger is a surprisingly lucrative niche truck for Ford, despite being mediocre at best.
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