Influenced by Autocar’s article “A Long Way from Pony” (14 July) concentrating on Hyundai’s plans on hybrid cars for the future, it occurred to me the unspoken and rather unpopular journey of the Korean Car Industry, which in the last decade has grown in presence in the European car market.
Before the introduction of new breed cars such as the Kia Cee’d, and the Hyundai ‘I’ series, these carmakers were categorically described as cheap, bland, dull and even dangerous. In fact, in 1986 when Hyundai began exporting its cars in to the US, they were described as ‘cans on wheels’ and ‘disposable cars’. Today however, I strongly believe that these adjectives and statements are far from accurate as the revolutionary process of making cars to European standards by Hyundai and Kia have made them more justifiable compared to our everyday Peugeot’s, Citroen’s and Seat’s.
If we are to look back at the turn of the 20th century manufacturers from Asia (Japan especially) started becoming big players in the automotive industry as they successfully blended their expertise with innovative and revolutionary ideas to compete for profits amongst mainstream European and American giants. Re-shaping the whole automotive industry, they turned principle into practice and re-invented how cars were made by building very efficient production systems. As an example, today, Toyota is the world’s largest automobile manufacturer by production and is the ninth largest company in the world by revenue.
However, latent negative brand associations still exist around Korean carmakers such as Hyundai and Kia and the real challenge lies in whether they are able to reverse this; critical if they are to excel in the highly fragmented and established European market. Identifying a market gap and replicating the Japanese could be a solution but won’t guarantee success. Building brand equity and reputation on the other hand will be one strategy that will draw attention and increase exposure to the brand.
In today’s world, its not rocket science to understand and realize the importance of brands that are everywhere around us. Playing a larger role than just supplementing our excessive needs and wants, they define and even characterize our lifestyles as social status symbols. Due to this human desire and craving for luxury brands, it has become increasingly difficult for emerging brands such as Hyundai and Kia to create brand equity. People have attached poor labels to their brands for many years which has had a detrimental effect on their ability to compete with established rivals, and achieve true growth and development. But there are signs of change.
Undertaking new marketing strategies beginning with sponsorship agreements with FIFA for the World Cup in 2002 has created some positive brand exposure. Success also came following the financial crisis of 2009 in the US when Hyundai and Kia gained market share despite the deteriorating automotive industry. The mix of good value, quality, and design in their cars appealed highly to the cash deprived consumers and the ‘Hyundai Assurance’ campaign in which Hyundai offered to take back the car if their customers lost their jobs was very successful in building confidence among consumers. This was significantly reflected on sales, which were up 14% in January compared to the same month a year earlier, while the entire U.S. auto market fell 37%.
Having already left a mark in the US market, where today in the US they outsell VW by more than three to one, I think the time has come for Hyundai to turn its attention to Europe, which is regarded as the most important market. Hyundai’s chief operating officer says that ‘Europe is a top priority because it affects how the company is perceived elsewhere’. Having already started making cars to European standards by giving increasing importance to quality, design, and innovation, they can now take the leap of faith of using low pricing to differentiate their cars in the European market, just like they did in the US. Considering the debt crisis in Europe today, they can maximize the opportunity of appealing to more cost-conscious consumers with cost effective incentives and an attractive value for money proposition.
In today’s highly branded world brand choice is still highly influences by image and experience rather than a products core function, making it hard for brand such as Hyundai and Kia to differentiate themselves. But the information world is creating fundamental changes as consumers make informed choices based on what they read online and what their peers say, leading to a demand for products with integrity and authenticity, that offer value for money. Essentially what is emerging is that product is the brand icon. Leveraging this and by taking advantage of the trends in the macroenvironment, these brands can develop themselves as key players in the industry and this is beginning to take fold as Hyundai finds itself ranking the 61st most valuable global brand in 2011 (Interbrand).
With their strong design philosophy, generous equipment levels, competitive prices and encouraging warranty deals; I think that they are throwing hints to Europe that they are serious. Us? I don’t think that we get the idea quite yet. Still enthusiastically waiting for the latest BMW’s and Mercedes’ and spending thousands of pounds on excessive extras that already should be provided as standard but left out by the Germans, I think that the time has come for us to consider wise purchases. The future is bright for the Koreans.
by Burak Serin/ an interns view