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http://www.detnews.com/legacy/editions/TheDetroitNews_01-13-2010_1A.pdf
Hyundai, Kia make mark in stressed U.S. market
CHRISTINE TIERNEY
The Detroit News
South Korea's Hyundai Motor Co., the star performer in last year's dismal U.S. auto market, at the Detroit auto show showed off three of seven new models it's rolling out this year and next, targeting not only Detroit's Big Three but Japan's leading automakers.
Hyundai and its Kia Motors affiliate were the only major carmakers to increase sales in an industry transformed by dramatic shifts that also appear to have put the brakes on the biggest Japanese car companies.
Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. were hit nearly as hard as the U.S. automakers in last year's slump. But in a market that contracted 21 percent, Hyundai and Kia increased their combined sales 9 percent by offering affordably priced, reliable and fuel-efficient cars, boosting their U.S. market share two points to 7.1 percent.
Japan's top carmakers struggled, meanwhile, with problems associated with Detroit's Big Three -- slumping demand for large vehicles. Toyota's U.S. sales sank 20.2 percent last year, Honda's sales fell 19.5 percent, and Nissan's were 19.1 percent lower.
This year, Japan's Big Three face even more pressure, caught as they are between energetic Asian rivals and U.S. automakers that have slashed costs through restructurings and bankruptcies.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, estimates that General Motors Co. has reduced its costs up to $6,000 per vehicle, narrowing or even eliminating the Asians' cost advantage.
"The $2,000 legacy cost disadvantage could turn into a cost advantage" for the U.S. automakers, Cole said. That could allow them to field more attractive and richly equipped models, he said. "It's a very big deal."
Meanwhile, companies like Hyundai are beginning to challenge the Japanese. Hyundai Motor America Chief Executive John Krafcik says Hyundai now draws from the same pool of customers as Japan's top manufacturers. "We conquest heavily from Ford, GM and Chrysler, but some of them," he said, referring to new Hyundai customers, "are Toyota- and Honda-intenders. That's a huge difference from before."
'We have the products'
This year, Hyundai is rolling out a midsize Sonata sedan that doesn't emulate the Toyota Camry or Honda Accord, but seeks to outshine them with sleek looks and a well-finished interior. "We would like to grow our share in 2010, and we have the products," Krafcik said. At the show, Hyundai displayed a new Tucson SUV, too, and a full-size luxury sedan, the Equus, which it plans to introduce to the American market.
"It's not that they have lowered their game," Krafcik said of the top Japanese automakers. "I have so much respect for them. What's changed is our business, our approach."
Toyota and Honda rolled out new hybrid cars at the show and tried to beat back suggestions from other automakers that gas-electric hybrids were a costly interim technology on the road to ultra-clean vehicles. Toyota unveiled the FT-CH concept and said it would develop a compact hybrid that will become the second of a family of Prius hybrids.
Honda displayed a sporty CR-Z two-seater that it promised would be fun to drive, while Nissan showed a Leaf electric car but didn't otherwise participate in the show to save money. "There's no Nissan here," said Mike Omotoso, a powertrain analyst at J.D. Power and Associates. "That's a defensive move."
At Toyota's news conferences, executives fielded as many questions about a huge recent recall to prevent unintended acceleration as they did questions about their hybrid strategy. "There's no bad point that we have to fix," Yoshi Inaba, chairman of Toyota Motor Sales USA, told reporters. "We have to generally improve. We have to review all the areas."
Toyota needed to hone its antennae, he said, to detect problems faster.
"Being No. 1 isn't all it's cracked up to be," said analyst Rebecca Lindland of Massachusetts-based IHS Global Insight. "Toyota had an uncharacteristically difficult year, not only from the balance sheet standpoint, but with things they've never been questioned on before, like safety."
The Japanese automaker expanded in the United States by selling to the baby boom generation. Now, it must increase its conquest rate, Lindland said. "That's a new challenge for them."
New rivals are emerging. Most auto executives here said they expect Chinese manufacturers to start shipping cars to the United States in a couple of years. BYD Auto Inc. displayed an e6 battery-powered electric sedan that it hopes to start selling in the U.S. late this year.
The Chinese automaker reiterated its objectives: to advance from fourth place to first in China by 2015, and to become the world's biggest automaker, ahead of Toyota, by 2025. Those goals, coming from a company that now sells around half a million cars a year, sound far-fetched.
But the renowned U.S. investor Warren Buffett has put money into BYD, a giant Chinese battery manufacturer that recently branched into auto-making.
Even the Europeans, who were beaten back in the U.S. market by the Japanese, are attempting a comeback. Volkswagen AG is building a plant in Tennessee to produce midsize cars for the U.S. market, where it was once a top import brand.
Rethinking large vehicles
Executives at Japan's leading automakers dismissed the notion that they were on the defensive now in North America. Honda spokesman David Iida said the automaker constantly monitors its costs and production plans.
But Honda and Toyota, which have been building cars in North America since the 1980s, were hit hard by the U.S. market's collapse in late 2008 and early 2009.
Officials at Toyota, asked if they faced rising pension costs similar to those that hobbled GM, said they didn't; their workers on average were in their forties.
The Japanese, however, may have to rethink their large vehicles. Like Detroit automakers, they were caught with too many trucks and SUVs in their lineups when U.S. consumers began switching to smaller, more affordable, more fuel-efficient cars.
With the exception of the popular RAV4 compact SUV, sales of every Toyota-brand light truck fell 20 percent or more last year. Sales of all Honda and Acura trucks were down in 2009, and Nissan tried to outsource production of its Titan pickup after failing to achieve sales targets.
When a production deal with Chrysler fell through, Nissan set out to find an "in-house solution" for the next Titan, said Carlos Tavares, head of the Nissan North America management team.
He disputed the idea that the Japanese were in the doldrums. "We don't feel any malaise," he said. "In the next 12 months, we're going to introduce eight new products.
Tavares added that Nissan was pulling back on sales to fleets and incentives to protect the brand. He noted that the Koreans were benefiting from a weak currency that made it easier to export vehicles, while the Japanese are struggling with a strong yen.
Toyota's Inaba, asked if the industry's shifts were threatening the Japanese, said "every month and every day" is a "hard battle."
"We take all our competitors seriously, as a threat to our position. So we have to do better."
http://www.detnews.com/apps/pbcs.dll/article?AID=20101130383
Hyundai, Kia make mark in stressed U.S. market
CHRISTINE TIERNEY
The Detroit News
South Korea's Hyundai Motor Co., the star performer in last year's dismal U.S. auto market, at the Detroit auto show showed off three of seven new models it's rolling out this year and next, targeting not only Detroit's Big Three but Japan's leading automakers.
Hyundai and its Kia Motors affiliate were the only major carmakers to increase sales in an industry transformed by dramatic shifts that also appear to have put the brakes on the biggest Japanese car companies.
Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. were hit nearly as hard as the U.S. automakers in last year's slump. But in a market that contracted 21 percent, Hyundai and Kia increased their combined sales 9 percent by offering affordably priced, reliable and fuel-efficient cars, boosting their U.S. market share two points to 7.1 percent.
Japan's top carmakers struggled, meanwhile, with problems associated with Detroit's Big Three -- slumping demand for large vehicles. Toyota's U.S. sales sank 20.2 percent last year, Honda's sales fell 19.5 percent, and Nissan's were 19.1 percent lower.
This year, Japan's Big Three face even more pressure, caught as they are between energetic Asian rivals and U.S. automakers that have slashed costs through restructurings and bankruptcies.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, estimates that General Motors Co. has reduced its costs up to $6,000 per vehicle, narrowing or even eliminating the Asians' cost advantage.
"The $2,000 legacy cost disadvantage could turn into a cost advantage" for the U.S. automakers, Cole said. That could allow them to field more attractive and richly equipped models, he said. "It's a very big deal."
Meanwhile, companies like Hyundai are beginning to challenge the Japanese. Hyundai Motor America Chief Executive John Krafcik says Hyundai now draws from the same pool of customers as Japan's top manufacturers. "We conquest heavily from Ford, GM and Chrysler, but some of them," he said, referring to new Hyundai customers, "are Toyota- and Honda-intenders. That's a huge difference from before."
'We have the products'
This year, Hyundai is rolling out a midsize Sonata sedan that doesn't emulate the Toyota Camry or Honda Accord, but seeks to outshine them with sleek looks and a well-finished interior. "We would like to grow our share in 2010, and we have the products," Krafcik said. At the show, Hyundai displayed a new Tucson SUV, too, and a full-size luxury sedan, the Equus, which it plans to introduce to the American market.
"It's not that they have lowered their game," Krafcik said of the top Japanese automakers. "I have so much respect for them. What's changed is our business, our approach."
Toyota and Honda rolled out new hybrid cars at the show and tried to beat back suggestions from other automakers that gas-electric hybrids were a costly interim technology on the road to ultra-clean vehicles. Toyota unveiled the FT-CH concept and said it would develop a compact hybrid that will become the second of a family of Prius hybrids.
Honda displayed a sporty CR-Z two-seater that it promised would be fun to drive, while Nissan showed a Leaf electric car but didn't otherwise participate in the show to save money. "There's no Nissan here," said Mike Omotoso, a powertrain analyst at J.D. Power and Associates. "That's a defensive move."
At Toyota's news conferences, executives fielded as many questions about a huge recent recall to prevent unintended acceleration as they did questions about their hybrid strategy. "There's no bad point that we have to fix," Yoshi Inaba, chairman of Toyota Motor Sales USA, told reporters. "We have to generally improve. We have to review all the areas."
Toyota needed to hone its antennae, he said, to detect problems faster.
"Being No. 1 isn't all it's cracked up to be," said analyst Rebecca Lindland of Massachusetts-based IHS Global Insight. "Toyota had an uncharacteristically difficult year, not only from the balance sheet standpoint, but with things they've never been questioned on before, like safety."
The Japanese automaker expanded in the United States by selling to the baby boom generation. Now, it must increase its conquest rate, Lindland said. "That's a new challenge for them."
New rivals are emerging. Most auto executives here said they expect Chinese manufacturers to start shipping cars to the United States in a couple of years. BYD Auto Inc. displayed an e6 battery-powered electric sedan that it hopes to start selling in the U.S. late this year.
The Chinese automaker reiterated its objectives: to advance from fourth place to first in China by 2015, and to become the world's biggest automaker, ahead of Toyota, by 2025. Those goals, coming from a company that now sells around half a million cars a year, sound far-fetched.
But the renowned U.S. investor Warren Buffett has put money into BYD, a giant Chinese battery manufacturer that recently branched into auto-making.
Even the Europeans, who were beaten back in the U.S. market by the Japanese, are attempting a comeback. Volkswagen AG is building a plant in Tennessee to produce midsize cars for the U.S. market, where it was once a top import brand.
Rethinking large vehicles
Executives at Japan's leading automakers dismissed the notion that they were on the defensive now in North America. Honda spokesman David Iida said the automaker constantly monitors its costs and production plans.
But Honda and Toyota, which have been building cars in North America since the 1980s, were hit hard by the U.S. market's collapse in late 2008 and early 2009.
Officials at Toyota, asked if they faced rising pension costs similar to those that hobbled GM, said they didn't; their workers on average were in their forties.
The Japanese, however, may have to rethink their large vehicles. Like Detroit automakers, they were caught with too many trucks and SUVs in their lineups when U.S. consumers began switching to smaller, more affordable, more fuel-efficient cars.
With the exception of the popular RAV4 compact SUV, sales of every Toyota-brand light truck fell 20 percent or more last year. Sales of all Honda and Acura trucks were down in 2009, and Nissan tried to outsource production of its Titan pickup after failing to achieve sales targets.
When a production deal with Chrysler fell through, Nissan set out to find an "in-house solution" for the next Titan, said Carlos Tavares, head of the Nissan North America management team.
He disputed the idea that the Japanese were in the doldrums. "We don't feel any malaise," he said. "In the next 12 months, we're going to introduce eight new products.
Tavares added that Nissan was pulling back on sales to fleets and incentives to protect the brand. He noted that the Koreans were benefiting from a weak currency that made it easier to export vehicles, while the Japanese are struggling with a strong yen.
Toyota's Inaba, asked if the industry's shifts were threatening the Japanese, said "every month and every day" is a "hard battle."
"We take all our competitors seriously, as a threat to our position. So we have to do better."
http://www.detnews.com/apps/pbcs.dll/article?AID=20101130383
