Hyundai Kona subcompact crossover will start in a hole

on Jun18

SEOUL — Hyundai’s U.S. dealers are getting something they desperately want and need, a new subcompact crossover called the Kona.

That’s the good news.

The bad news is twofold: Hyundai is among the last mainstream brands to enter the segment — one of the U.S. market’s hottest and most hotly contested — and dealers won’t have many Konas to sell.

That predicament reflects the persistent disconnect between Hyundai Motor America’s demands and the production decisions from the parent company in Korea. The tension has led to instability in HMA’s executive ranks in recent years, as aggressive sales expectations haven’t been matched with a savvy product mix, sufficient incentives or marketing support, insiders say.

The Kona is set to hit the U.S. market in early 2018, nearly a decade after Nissan’s Juke breathed life into the subcompact crossover segment.

Among other competitors, General Motors’ two entries have already been through midcycle refreshes, and Fiat Chrysler’s Jeep Renegade was a runaway global hit. Kia roughly covers the turf with its boxy Soul and hybrid Niro. Mazda, Honda, Fiat and Subaru are all present. A delayed Toyota entry is now on sale, and latecomer Ford will have its EcoSport in showrooms by year end.

Hyundai plans to build just 200,000 Konas annually for the global market at its already crowded Ulsan plant in Korea. Only about 40,000 units will make it to the U.S., Hyundai Motor Corp. Vice Chairman Euisun Chung said at Kona’s debut. For Hyundai’s 835 U.S. dealers, that’s an average of four units a month.

The 40,000-unit allocation is dwarfed by Kona’s competitors: Jeep’s Renegade topped 100,000 U.S. sales in 2016; Subaru’s Crosstrek sold 95,677 units; and General Motors sold 79,016 of its Chevy Trax model and a similar number of Buick Encores.

Sought for years

Those figures reflect the rapid buildup in the segment since the end of the recession. Sales for these cute-utes shot up 30 percent in 2016 to 507,575 vehicles, according to the Automotive News Data Center, and IHS Markit is forecasting strong growth in the segment, even as the broader market eases. Many automakers have scrambled to shift production from entry-level sedans and hatchbacks to comparably affordable and youth-oriented crossovers.

The trend hasn’t escaped the attention of HMA or its dealer body, which have been asking HMC for a vehicle such as the Kona for at least five years, according to people familiar with HMA’s product requests as well as several dealers.

But Hyundai’s big U.S. launch this year was the Ioniq gas-electric hybrid car line.

One high-ranking employee at the company told Automotive News that Hyundai figures it may have missed out on as many as 1 million subcompact CUV sales globally over the last five years by not having an entrant.

Dealers have wanted a car like Kona for years.

Even so, Hyundai has been reluctant to shift production from its slow-selling small cars or to add new capacity to feed U.S. demand for its other crossover models. Earlier this year, amid threats by then-President-elect Donald Trump to levy tariffs on imported vehicles, the company announced plans to invest $3.1 billion in the U.S., with part of that going toward upgraded capacity.

In the meantime, Hyundai’s U.S. sales operations are struggling to absorb a glut of cars and a shortage of crossover offerings and supplies, while also facing pressure to meet strict sales-growth targets.

That pressure led to last year’s firing of HMA CEO Dave Zuchowski days before Christmas, and the decision this month by HMA sales chief Derrick Hatami to leave for the top sales post at Volkswagen. Sources told Automotive News that Hatami was likely to be fired in the near future, as Hyundai posted a string of monthly sales declines.














2018 Hyundai Kona
Hyundai’s Kona subcompact crossover will go up against competitors such as the Subaru Crosstrek, Honda HR-V, Chevy Trax and Toyota C-HR. Here’s how it stacks up against the best-seller in the segment, the Jeep Renegade:
  2018 Hyundai Kona 2017 Jeep Renegade
Wheelbase 102.4 in. 101.2 in.
Length 164.0 in. 166.6 in.
Width 70.9 in. 74.2 in.
Height 61.0 in. 66.5 in.
Base engine 2.0-liter, inline 4-cyl. 1.4-liter, inline turbo 4-cyl.
Horsepower 147 @ N/A rpm 160 @ 5,500 rpm
Torque, lbs.-ft. 132 @ 4,500 rpm 184 @ 2,500-4,000 rpm
Optional engine 1.6-liter inline 4-cyl. turbo 2.4-liter inline 4-cyl.
Horsepower 175 @ N/A rpm 180 @ 6,400 rpm
Torque, lbs.-ft. 195 @ 1,500-4,500 rpm 175 @ 3,900 rpm

Fashionably late?

At the Kona launch here last week, HMC put a positive spin on the Kona’s late arrival, with numerous executives saying that by being late, the Kona could avoid the shortcomings of earlier competitors.

“I am aware of those global competitor vehicles, which are already well positioned in this segment,” Chung said. “However, we at HMC believed that rather than hastily penetrating the market, it was more important to deliver the unique values distinctive to the Hyundai product that cannot be found anywhere.”

The automaker also said the Kona needed to wait until the new platform it rides on was ready.

Hyundai isn’t alone in facing such a hurdle. Development of Toyota’s long-awaited C-HR subcompact CUV, originally developed for the now-defunct Scion brand, was delayed halfway through the project so it could be moved onto the modular TNGA platform Toyota was developing at the time.

The C-HR went on sale in the U.S. in April.



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