Hyundai: Price war under way in US car market

[Blue Oval Guide]

The first shots have already been fired in what could be an escalating "price war" between major automakers in the US market, according to a Hyundai Motor Co executive,

 

"I think we can officially say that a price war broke out in the industry,' John Krafcik , president and chief executive of Hyundai Motor America said on the sidelines of the Chicago auto show. "There is apparently a lot of pressure to deliver sales results."

 

Increased discounting on new car sales would be a boon to consumers but could chip away at the profitability that many investors had projected for automakers at the start of the second year of a still-developing recovery in US auto sales.

 

Krafcik said General Motors Co had started the most recent round of price-cutting and was quickly matched by Toyota Motor Corp this month.

 

"We'll see if others decide to follow," said Krafcik. "It's certainly not in our plan right now."

 

Until the start of the year, automakers had resisted the temptation to increase their aggregate spending on rebates and low-rate financing to lure car buyers.

 

Many analysts had counted on that more disciplined approach to pricing holding during this upswing, especially after the Detroit-based automakers used the industry's recent crisis to renegotiate labor deals and shutter plants.

 

Aggressive consumer discounts have contributed to volatile boom-bust cycles for the industry over the past decade and eroded the resale value of vehicles, particularly from the Detroit-based manufacturers, who have had to compete on price.

 

INDUSTRY TAKING 'STEP BACKWARD'? "I would call this a step backward for the industry," said Krafcik. "This is short-term thinking in a long-term process that hurts manufacturers and consumers."

 

GM posted a market-leading sales gain of 23 per cent in January after stepping up its spending on what it said were "targeted" sales incentives.

 

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[156n3rd]

When GM is done flooding the market the way it used to, it's cars will sit on the lot waiting to be sold again. They don't get it. Discounts are tghe only way some people are willing to buy. Maybe because they know these cars are over-priced from the get-go.

Edited February 14, 2011 by 156n3rd

[TomServo92]

When GM is done flooding the market the way it used to, it's cars will sit on the lot waiting to be sold again. They don't get it. Discounts are tghe only way some people are willing to buy. Maybe because they know these cars are over-priced from the get-go.

 

Exactly. GM is trying to retain the sales crown even if means losing money. What a bunch of idiots.

[Edstock]

Exactly. GM is trying to retain the sales crown even if means losing money. What a bunch of idiots.

Residuals and resale . . .

[mustang let back]

thats the only way they beat the mustang in sales. :reading:

[J-150]

INDUSTRY TAKING 'STEP BACKWARD'? "I would call this a step backward for the industry," said Krafcik. "This is short-term thinking in a long-term process that hurts manufacturers and consumers."

 

 

 

This from the company that positions itself as offering everything the Japanese do at a lower price.

 

Sounds like he is just a little mad that with GM and Toyota discounting, Hyundai loses their competitve pricing edge.

[J-150]

INDUSTRY TAKING 'STEP BACKWARD'? "I would call this a step backward for the industry," said Krafcik. "This is short-term thinking in a long-term process that hurts manufacturers and consumers."

 

 

 

This from the company that positions itself as offering everything the Japanese do at a lower price.

 

Sounds like he is just a little mad that with GM and Toyota discounting, Hyundai loses their competitve pricing edge.

[RangerM]

This from the company that positions itself as offering everything the Japanese do at a lower price.

 

Sounds like he is just a little mad that with GM and Toyota discounting, Hyundai loses their competitve pricing edge.

You could be right, however what I've seen recently at a Hyundai dealership tells me that they aren't trying to position themselves as simply the cheaper option, anymore. They really are trying to be a viable option--wanting people to want their products for the products themselves, and not because they have to settle for them.

 

If Toyota has been cheapening the product (not just discounting), and from what I've seen recently they have, it does undermine Hyundai's ability given they don't have a similar long-term reputation to ride on.

Edited February 14, 2011 by RangerM

[TomServo92]

This from the company that positions itself as offering everything the Japanese do at a lower price.

 

Sounds like he is just a little mad that with GM and Toyota discounting, Hyundai loses their competitve pricing edge.

 

It's a little different when you sticker your cars lower vs. pricing them high and then offering incentives to move them.

[NickF1011]

thats the only way they beat the mustang in sales. :reading:

 

Eh, other than maybe the past couple of months, Mustang incentives were far higher than they were on the Camaro. Let's face it. GM did a good job with the Camaro (interior aside).

[DEREKC]

GM was sitting on a great deal of stock that they just could not sell, and I would like to say that they still have a lot of old stock sitting in their car lots. Since they have so much old stock, and since they spend so much on advertising they have to try and push for volume sales to stay alive. Perhaps my perspective is a little different being Canadian, but I do not understand why anyone would consider supporting GM, a company that should be history and should have been broken up and sold off.

I do not think Hyundai has to do a thing, because they now have a great product and are able to compare apples with apples. Truth be told, I am still leery of their quality.

[twintornados]

This from the company that positions itself as offering everything the Japanese do at a lower price.

 

Sounds like he is just a little mad that with GM and Toyota discounting, Hyundai loses their competitve pricing edge.

It is a prime example of "live by the sword, die by the sword"...I find it amusing that Hyundai of all companies is complaining of the price war.....they started it.....

[silvrsvt]

Eh, other than maybe the past couple of months, Mustang incentives were far higher than they were on the Camaro. Let's face it. GM did a good job with the Camaro (interior aside).

 

Meh...I think its more market fatigue then anything else. The "new" Mustang sold like gang busters for the first 3 years it came out (far better then the new Camaro is now). The Camaro was off the market for long time, and is still "new" and fanbois are snapping them up...lets see how sales numbers are in another year or two when the newness factor (which IMO wore off before the car even came out LOL) wears off and people live with them and decide that they don't want another one because of the horrific dash on them or whatever. Plus you also have the Challenger sphioning sales off from both brands for whoever likes Mopar.

 

Short of IRS, the Mustang doesn't give up anything to the Camaro and is a better performer across the board.