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Mini crossover may be missed opportunity for Hyundai in US – The Economic Times

DETROIT: South Korea’s Hyundai Motor Co , already struggling with a host of business challenges, is developing another headache: a dearth of product to compete in a fledgling US mini-crossover utility vehicle market even as rivals gear up for a big push. This adds to Hyundai’s challenge in making significant market share gains in the United States, where it has a smaller presence in the SUV segment than its rivals. A Hyundai executive said this week at the Detroit auto show that the company’s share of the US market, its second biggest globally, will likely improve to 4.7 percent this year from 4.6 percent in 2013. Excitement over the promise of a market for small “subcompact” crossover utility vehicles (CUVs) is mounting in the United States. General Motors Co said it expects sales of its own Buick Encore subcompact CUV and other mini SUV-like vehicles by other automakers, including those offered by luxury brands, to reach 400,000 vehicles a year in 2018. “I am really excited about the potential,” McCormack told Reuters in an interview this week at the Detroit auto show. “The idea is … I can get that functionality (of crossovers) but I don’t need to do it in a bigger vehicle necessarily. Now, I think it fits a lot of people’s lifestyles very nicely.” Yet, according to four individuals close to the company, Hyundai won’t likely have an answer for that expected growth in the foreseeable future. “It looks more and more like Hyundai is going to completely miss the boat with mini crossovers at least for the foreseeable future,” noted one of the knowledgeable individuals who are privy to Hyundai’s global product plans but asked not to be identified. He said it isn’t that Hyundai isn’t searching for a solution, but there is “no answer so far.” Dave Zuchowski, the recently appointed US chief executive of Hyundai, said the automaker plans to boost its crossover and SUV business as part of a mid-term effort to reach a market share of 5 percent. But Hyundai has no immediate plans, he noted, to come up with a model to compete in the subcompact CUV market. Instead, it plans to focus its sales and marketing effort on bigger CUVs that it already markets, namely the Tucson compact and the Santa Fe midsize SUVs. Hyundai is “definitely looking at” the subcompact crossover market, Zuchowski told Reuters on Monday at the show. “There are a lot of activities going on there right now. We have no immediate plans, nothing approved in the product cycle. But it is the segment that interests us.” Hyundai’s mini crossover challenge compounds a host of issues it’s already confronted with in the United States, including heightening competition from Japanese automakers now armed with the cheaper yen, as well as a lack of manufacturing capacity that the company’s US sales team has cited in recent months as an obstacle to growing sales. Zuchowski said the capacity issue was being resolved, albeit incrementally as the company has no current plan to build another US factory.
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