- As we wind down this rough year and consider results, one brand stands out: Hyundai.
- When COVID-19 hit, Hyundai Group (Hyundai/Kia combined) performed 50% better in year-over-year sales than the industry average.
- Hyundai’s climb in sales is a combination of defined strategy, risk taking and a little bit of luck.
The global pandemic has played havoc on the U.S. economy and the automotive market, with a forecast of 14.3 million new-vehicle units to be sold in the U.S. this year, down roughly 3 million units from 2019. Despite lower sales across the board, certain brands fared better than others. As we wind down this rough year and consider results, one brand stands out: Hyundai.
In the Great Recession a decade ago, Hyundai fared reasonably well and recovered strongly. When COVID-19 hit, Hyundai Group (Hyundai/Kia combined) performed 50% better in year-over-year sales than the industry average, but Hyundai brand has continued to outperform Kia. Hyundai brand market share has increased by half a percentage point this year, among the biggest gainers.
Meanwhile, Hyundai’s incentive spend, as measured by a percent of average transaction price (ATP), is down significantly in 2020. As a percent of ATP, Hyundai incentive spending this year is down nearly 2 percentage points below their 5-year average and their 2019 level.
Hyundai’s climb in sales is a combination of defined strategy, risk taking and a little bit of luck. In times of economic uncertainty, the value proposition is essential. Hyundai has been strengthening its affordability and fuel efficiency imageries for years, while putting a history of mediocre quality in the rearview mirror. (In 2019, Hyundai Group’s three brands – Genesis, Kia and Hyundai – were the top three highest ranked brands in the well-known J.D. Power IQS study). Both affordability and fuel efficiency are in the top seven valued factors that are most important to consumers shopping for a non-luxury vehicle, according to the Q3 Kelley Blue Book Brand Watch Report. In other words, in tough times, Hyundai is good at what matters most to car buyers.
When COVID-19 hit, Hyundai effectively adapted to the market changes and quickly switched gears with their communication strategy. Their marketing message focused on the Assurance Program, Payment Deferment and APR/Cash Specials, which scored 10% above average on Change, a metric provided by Ace Metrix, which measures the impact of advertising.
Hyundai also benefited this year from reaching customers who are more affluent, younger, and with higher credit scores. Currently, 43% of Hyundai buyers have $100K+ household incomes, compared to 33% in 2015. Their buyers are younger too, with 30% in the 18-44 age range now, compared to 24% in 2015. Hyundai also has three times the number of customers with good credit scores compared to ones with bad credit.
While Hyundai’s strategy of reaching the right customers with the right messages proved effective, there’s a little luck sprinkled in there as well. Hyundai’s product cadence was perfect for 2020, with a collection of good, new SUVs—exactly what buyers were looking for.
The new Palisade stands out. The three-row SUV launched last year in an intensely competitive segment and ranked 21st out of 26 vehicles, as it was slow to meet initial demand. A year later, Palisade now ranks 11th, solidifying itself as a fast-rising star in segment that is down 12.4% year over year.
Heading into 2021, Hyundai’s SUV blitz, 7 model line-up expansions, and eco-focused initiatives are critical to its recovery and its continued ascension. Not only is Hyundai focused on revolutionary products and moving forward with technological advances, but they are more committed to making progress for humanity and social changes, including their response to COVID-19. Both are essential in further developing that important balance of emotional and rational factors that will enhance their overall brand imagery going forward.
Vanessa Ton is a senior industry intelligence manager at Cox Automotive.