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Hyundai Continues to Develop Premium Large SUVs

The U.S powered SUV market has held back Hyundai Motor Company’s sedan-heavy line up in the US and they are considering producing bigger SUVs that will have the Genesis luxury sedan as its basis.

It could however take up to 3 years for the new SUVs to go on sale. The South Korean automaker’s maintains a unique track record for bigger SUVs but without any pickups, it may be a challenge to penetrate the high-margin SUV market in the US and Japan.

There isn’t any guarantee that Hyundai will proceed with making the new SUV though as the brand isn’t known for its pricier SUVs and there is no guarantee that oil prices won’t skyrocket again and dramatically lessen the demand for gas guzzling SUVs.

Based on an internal proposal Hyundai is contemplating an SUV influenced by the Genesis that will satisfy the high end of its SUV line. The ultimate goal would be to improve Hyundai’s brand image overall and also tap into the Genesis market.

Sales of the Genesis increased over 30% from January to May with sales of nearly 15,000 vehicles, which is might higher than the overall 2.2% sales increase for Hyundai.

Hyundai will stop production of its largest SUV the Veracruz by the end of next month according to a labor union publication in South Korea. Hyundai sold less than 5,000 Veracruz vehicles last year in South Korea compared to 54,325 worldwide in 2007.

Hitting a Fork in the Road

Hyundai is still a high performing automaker in the US market, but Hyundai sales decreased by 10% from the year before. This is the company’s biggest decrease in almost 5 years and they are falling behind the market’s 2% gain.

In 2015, Hyundai’s sales were down slightly, which represents a possibility to increase performance among the leading automakers. A weak yen that benefits Japanese rival automakers also played an important part.

SUVs and truck sales are booming in the US and South Korea which are Hyundai’s 2nd and 3rd biggest markets after China, but there are only 2 Hyundai SUV available in the US market – The compact Tucson, the mid-size Santa Fe, but no pickups. On the other hand Toyota Motor’s America range has 8 SUVs and 2 pickups.

The IHS stated that 21% of Hyundai’s US registered vehicles were crossovers or SUVs compared to the 34% for the entire industry.

Where to Go From Here

Hyundai’s decision about making large SUVs with 3 rows of seats is based on the company’s prior experience.

The Veracruz luxury SUV model debuted in the US is 2007 but by 2013 it stopped selling there because of declining sales. Sister company Kia removed its largest SUV the Borrego or Mohave from the US market in 2011 after selling there of only 3 years.

Due to the highly success of the Tucson, especially at Phoenix Hyundai dealerships, Hyundai may have future capacity problems. The second production line must also be enough to satisfy the US market demand for the vehicle. Consequently, because of the popularity of the Tucson, it may not be ready until September. The proposed US plant to make SUVs is hypothesized to be ready by 2017.

According to HIS, pickups make up 14% of the US market and in response Hyundai is considering producing its first pickup based on the Santa Cruz midsize SUV.

To learn more about Hyundai and the automaker’s latest models, visit the Chapman Hyundai dealership.

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