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Hyundai, Kia thrive as others go into skids

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By Mark Phelan
Saturday, Nov. 21, 2009

Anybody who dismisses Hyundai's recent success as a cash-for-clunkers-fueled aberration is in for a rude surprise in 2010.

Hyundai is virtually alone in selling more cars in recession-ravaged 2009 than in 2008. Driven by smart marketing and strong new vehicles, Hyundai's 2009 sales are up 4 percent versus this time last year. The Korean automaker's second brand, Kia, is riding a similar wave, with sales up 6.7 percent.

No other manufacturer comes close to that performance. Chrysler, Ford, General Motors, Honda, Nissan and Toyota have all seen their 2009 sales fall from 20 percent to 39 percent.

Hyundai benefited greatly from the cash-for-clunkers program, but its performance grew from several basic strengths.

"They've made very substantial gains in styling and even bigger ones in quality and reliability," said Joe Phillippi, principal of AutoTrends Consulting, Short Hills, N.J.

The South Korean giant will amp up its challenge to Toyota to be the leading Asia-based automaker with a handful of key new models in 2010.

"Hyundai is now the equal of the top Japanese companies," said Aaron Bragman, research analyst in the Troy office of IHS Global Insight.

IHS predicts Hyundai's U.S. sales surge will continue from around 762,000 this year -- 12.8 percent above 2008 -- to 826,000 in 2010 and more than a million in 2011.

"The people who are most concerned about Hyundai are not the (U.S.) domestic automakers, but Toyota and Honda," Bragman said. "Hyundai's big gains have been in the passenger-car market. That's Toyota's bread and butter."

The sleek new Sonata midsize sedan will continue that assault when it goes on sale in the first quarter, about the same time as a stylish new version of the Tucson crossover SUV.

The Tucson will be nearly identical to the widely praised ix35 concept vehicle Hyundai revealed at the Frankfurt auto show in September. The ix35's styling, features and high-quality interior drew favorable comparisons to Lexus, Toyota's luxury brand. A face-lifted version of the brand's larger Santa Fe crossover is to debut at the Los Angeles Auto Show in December.

Hyundai plans to begin selling its big Equus luxury sedan in the United States next summer. The company's first hybrid, a version of the new Sonata, should debut next fall.

A low-priced sport coupe based on the Veloster concept car may further spur Hyundai's sales.

"Hyundai's new vehicles are very well suited to what buyers are looking for in this environment," said Stephanie Brinley of consultant AutoPacific.

Kia, which Hyundai acquired when the smaller Korean automaker went bankrupt in 1998, is strengthening and expanding its model line.

The quirky Soul hatchback gave the brand a fun and recognizable small car this year, while the Forte sedan offers the room of a midsize car at a price closer to compact models like the Honda Civic.

Hyundai capitalized on 2009's financial insecurity more effectively than any other automaker. First, it told buyers they could return their car if they lost their job. Then the company offered a year's worth of gasoline at $1.49 a gallon.

"It's a triumph of merchandising," said Jim Hall, managing director of 2953 Analytics in Birmingham.

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