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(3rd LD) Hyundai bets on small SUVs to revive sales

All Headlines 18:20 June 13, 2017

(ATTN: CHANGES headline; ADDS details throughout and Kia's Stonic subcompact SUV image)
By Choi Kyong-ae

GOYANG, South Korea, June 13 (Yonhap) -- Hyundai Motor Co. on Tuesday unveiled its first subcompact SUV Kona in a move to bolster its SUV lineup amid growing demand for recreational vehicles.

After struggling with a lack of new models and sliding sales in its major markets, Hyundai Motor has announced its plan to add five new models by 2020 to its current SUV lineup composed of the Creta, Tucson, Santa Fe and Maxcruz models.

The five new SUVs are an all-electric Kona, a fuel cell-based car, an SUV larger than the Santa Fe, and two smaller-sized crossovers, the country's biggest carmaker by sales said.

"The global SUV market has grown by an average of 20 percent in the past seven years. In particular, global carmakers are vying for a bigger share in the subcompact (or B segment) SUV market," Hyundai Motor Vice Chairman Chung Eui-sun said in a press conference held for the Kona's world premiere.

Instead of "hurriedly" launching new compact SUV models in the markets, Hyundai completed a thorough market analysis and used the "optimal" technologies in the Kona, he stressed.

Hyundai's Kona SUV (Courtesy of Hyundai Motor Co.) (Yonhap)

On Wednesday, the Kona SUV mated to either a 1.6-liter gasoline turbo engine or a 1.6-liter diesel engine will go on sale in the domestic market. The models are fitted with a seven-speed dual clutch transmission, Hyundai said.

The Kona is priced at between 19 million won (US$16,800) and 27 million won for domestic consumers.

The company said it will start the production of the Kona for export to Europe and the United States at its domestic plants in August and December, respectively. It counts Nissan Motor Corp.'s Juke, Honda Motor Co.'s HR-V, Toyota Motor Corp.'s C-HR and Renault S.A.'s Captur (sold as QM3 here) as rivals of the Kona.

Hyundai aims to export a combined 41,000 units of the Kona to the two major markets this year and 150,000 units next year. Domestically, it targets to sell more than 26,000 Konas this year and 45,000 units next year.

Kona models equipped with a 1.0 gasoline turbo GDi engine and 1.6 gasoline turbo GDi engine will be available in Europe. The 1.6 diesel model is scheduled to be launched there next year. In the U.S., the 1.6 gasoline turbo GDi engine and 2.0 gasoline MPi engine Konas will be sold, Hyundai said.

Previously, Hyundai sold subcompact SUVs only in emerging markets, missing out on the opportunity to launch those models in South Korea, the U.S. and Europe.

Hyundai Motor Vice Chairman Chung Eui-sun answers questions from a reporter in a Q&A session following the company's world premiere event for the Kona SUV held at Hyundai Motor Studio in Goyang, just northwest of Seoul, on June 13, 2017. (Yonhap)
A rendered image of the front view of Kia's Stonic subcompact SUV (Courtesy of Kia Motors Corp.) (Yonhap)

The subcompact SUV market has grown sharply over the past seven years, jumping to 4.64 million units sold in 2016 from 485,000 units in 2010. It is expected to grow 19 percent on-year to 5.54 million units this year, according to IHS Automotive data.

To offset slowing sales in China and the U.S., Hyundai has decided to diversify its SUV lineup by launching a variety of SUV models, including a high-performance one, from the smallest A segment to the largest E segment.

In the January-May period, Hyundai sold 1.82 million vehicles, down 6.5 percent from 1.95 million units a year earlier. Given this trend, the carmaker may miss this year's sales target of 5.08 million units.

"We have suffered a setback in sales, but we will use this as an opportunity to overhaul our lineup. We will strengthen business ties with technology firms such as Baidu and Uber," said Chung, the only son of Hyundai Motor Group Chairman Chung Mong-koo.

When asked about overseas acquisitions, he said the company had no such plans for now.

Meanwhile, Hyundai's affiliate Kia Motors Corp. will also strengthen its SUV lineup by launching the Stonic subcompact SUV next month. Its current lineup includes the Niro, Soul, Sportage, Sorento, and Mohave SUVs.

Hyundai and Kia, which together form the world's fifth-largest carmaker by sales, aim to sell a combined 8.25 million autos this year, up from 7.9 million in the previous year.

kyongae.choi@yna.co.kr
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