A "product renaissance" is helping Hyundai improve owner loyalty, according to a new study.
The upstart Korean automaker Hyundai has arguably done the best job of gaining ground at the expense of Japanese makers still struggling with shortages caused by the March 11 earthquake and tsunami.
Indeed, it seems like a lot of things are going right for Hyundai which now has topped traditional leaders Toyota and Honda in terms of owner loyalty, according to a new study. The news lends credence to claims by the Korean maker that it will set another U.S. sales record this year.
According to online sales and data service KBB.com, 52.3% of Hyundai buyers researched another model by the Korean maker as they searched for a new vehicle during the second quarter of 2011. That compares to:
- Honda at 49.7%;
- Toyota at 47.7%;
- Ford at 45.4%; and in fifth place
- Subaru at 44.8%.
Some industry analysts might question the metrics used by KBB, as loyalty is more traditionally defined as someone owning a vehicle actually purchasing a model from the same brand again. But the research reflects general trends in Hyundai’s favor.
Equally significant is the fact that more American motorists are considering Hyundai products at all. A decade ago, according to Hyundai Motor America CEO John Krafcik, just 12% put the brand on their shopping list. That has now surged past 30% — though the figure is still barely half that of Toyota.
But Japanese makers routinely list the Korean maker and its sibling Kia brand as among their biggest worries. Kia was one of only two brands besides Hyundai – along with Mini – to post a year-over-year loyalty gain, according to KBB.
Among the factors working in Hyundai’s favor: a wave of new products and a marked improvement in its quality.
The Korean maker has gained considerable traction with its “4×40” campaign, for example, promoting the fact that with the upcoming launches of the Accent and Veloster it will have four vehicles rated at over 40 mpg on the highway. At the other extreme, it is launching an updated version of its first luxury sedan, the Hyundai Genesis, for 2012. And while volumes are modest, the maker now anticipates selling about 50% more of the premium-luxury Equus model this year than it originally predicted.
“Hyundai’s product renaissance is benefiting the company not just by attracting an all-new customer base, but by helping them to retain “current Hyundai owners,” said Arthur Henry, market intelligence manager for Kelley Blue Book. It’s a “testament to the power of attractive vehicle designs and intriguing marketing.”
On the quality front, Hyundai first aimed to overcome long-standing problems with an industry-leading 10-year/100,000-mile warranty. But it was able to afford that program by steadily reducing defects. On the down side, the maker posted an unexpected drop in the latest J.D. Power and Associates Initial Quality Survey.
Last year, Hyundai posted a record 538,228 sales in the U.S. The maker could top 600,000 for 2011, according to some forecasts.