More Trouble At Hyundai

[range]

$2000 cash per car to the dealer, PLUS customer cash rebates.

 

I wonder if all this cash Hyundai is throwing around came from those loans they did not have to pay back to the government-owned bank?????

 

LINK to Korean Press

 

Hyundai Offers US Dealers Incentives

 

By Kim Yon-se

Staff Reporter

 

Hyundai Motor is providing its dealers in the United States with incentives amounting to more than 10 percent of the consumer price on its Sonata sedan.

 

In a recent report, Samsung Securities said the automaker’s commission for dealers there has reached $2,000 (1.9 million won) for each Sonata sold, or 10.5 percent of the average sale price of the sedan, and a $500 increase from the previous commission.

 

Pointing out that the incentives are excessive, the brokerage house said the marketing practice will worsen Hyundai Motor’s profitability in the world’s largest automobile market.

 

``I believe its profitability will stay in a deficit even after full operation commences at its Alabama plant, because of the large percentage of incentives,’’ Samsung Securities analyst Kim Hak-ju said.

 

His remarks indicate that Hyundai Motor has not been satisfied with its American sales performance despite a higher share in the U.S. market on the back of local production at the Alabama plant since May 2005.

 

Furthermore, its sales growth is allegedly attributable to massive sales to car rental agents, rather than sales to ordinary U.S. consumers. Last year, Hyundai Motor raised its incentives for dealers by about $500 from the former $1,500 level.

 

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Edited June 7, 2006 by range

[marc-o]

Of course the rest goes:

 

But some analysts say the practice is not worrisome, adding that Toyota Motor and Honda Motor are offering incentives at similar percentages in the U.S. amid tough competition.

 

Myasset Securities analyst Kang Sang-min said the evaluation on Hyundai Motor should be focused on its growth potential in the U.S. market to match Toyota’s success there.

 

He said the important issue is whether the automaker could effectively launch other models, apart from the Sonata, in the market, adding, ``It is meaningless to mention incentives effect on profitability (at the first stage of Hyundai’s active marketing after the building of U.S. production lines).’’

 

Hyundai Motor and its affiliate Kia Motors set a new annual record by selling over 730,000 vehicles in the U.S. market in 2005.

 

Last year’s total of 730,863 vehicles was up 6.1 percent from the preceding year’s 688,670 units. They ranked seventh in annual sales in the U.S. for the second consecutive year.

 

 

So in short:

 

-Hyundai is providing incentives to its dealers to accept units (same as almost every other manufacturer at least at some point over the last year or two)

 

-Hyundai's increase in sales of 6.1% over the last year can be mostly attributed to fleet sales (of course we don't have exact numbers, but from what i see personally i'd be surprised if hyundai's fleet sales significantly exceeded ANYone else's).

 

Thus suggesting Hyundai is just like anyone else trying to sell cars and manage their factories.

 

I don't know about anyone else, but if Hyundai aspires to become the fleet retailer of excellence, that's fine with me... although I wouldn't bet on that.