Hyundai looks to Aussie market

HYUNDAI Motor Company could take partial or full control of local sales and distribution operations within three years.

That's the forecast of CK Liew, the man who heads the independent Hyundai Automotive Distributors Australia, which has owned the franchise here for 12 years.

Mr Liew's forecast is not an entire surprise as Hyundai Motor Company president and chief executive officer Kim Dong-jin told GoAuto at the Seoul motor show last November that the move was on the agenda.

HADA is a subsidiary of Cycle and Carriage Australia, whose parent Cycle and Carriage Limited is based in Singapore. It is one of the last independent distributors of a volume brand left in the Australian market.

Cycle and Carriage is already involved in a 50:50 joint-venture with Audi AG to distribute the German brand in Australia. It lost the Chrysler-Jeep franchise back to the factory in 1999.

"HMC involvement is simply a matter of time," Mr Liew said.

"If you look at most of the manufacturers worldwide, eventually they want to be involved directly so they can have a very strong influence on the distribution side.

"So we are being quite realistic, it's a matter of time. I don't really know when, but it could be within three years." Mr Liew confirmed discussions about an HMC buy-in were on-going.

"I think it is always a subject that is being discussed," he said.

"But if you were sitting at HMC in Seoul, your priority must be the USA where they are doing well. China is a large market that they must be involved in. So I think their priority must be in those areas rather than Australia." Under HADA's stewardship, Hyundai rose to almost 60,000 sales per annum in 1998, largely on the back of the budget priced Excel, which prospered thanks to $13,990 driveaway pricing.

Back then Hyundai had just four model lines - Excel, Lantra, Coupe and Sonata.

But as the range has dramatically expanded with the addition of the Grandeur large car, Trajet people-mover, Accent small car, Santa Fe and Terracan 4WDs, Elantra LaVita mini people-mover and Getz mini car, so the sales have dwindled away.

Last year Hyundai finished with 34,176 sales, down from 40,056 in 2001. It has started 2003 in similarly poor form and is now at the bottom of the top 10 sales companies in the nation, whereas it was the top importer in the late 1990s.

"We have learned that while the expansion of the range was good in theory, it also distracted us from focusing on certain products," Mr Liew said.

"Instead we tried to spread a limited (marketing) budget over 10 products.

"And also the dealers had problems coping with that range because they were so used to selling at $20,000 and below. Then suddenly they are having to sell a $40,000 car and that sort of customer is very different to the sub-$20,000 buyer.

"So there is a reconsideration in the company. Perhaps we should concentrate on a certain two products and then use one or two other products to lift the brand image." Santa Fe and Tiburon are believed to be the star cars picked out for brand image promotion.

That strategy will flesh out more after HADA finishes working through an advertising agency selection process.

It has also restructured internally to separate more fully the sales and after-sales operations of the company.

HADA is also considering a tidy-up of its range. While the Accent has returned recently as a 1.6-litre three-door to bolster its slipping grasp on the small car market - a drop Mr Liew blames on pitching the Getz at too youthful a market - the company also looks likely to drop the LaVita.

The 3.5-litre Grandeur model may also be delayed until a full model change due in about 18 months time, leaving only an Elantra facelift as the company's remaining new model action for the year.

From feast to famine then? "No, I think it's from feast to reasonable diet," joked Mr Liew.