Korean maker passes Mazda

Hyundai's sales soar, and it inches ahead in 2000 race

Motors

July 05, 2000|By ORANGE COUNTY REGISTER

This wasn't supposed to be Hyundai's year.

It was to be the comeback year for Mazda's North American operations. With a redesigned minivan and a new SUV, Irvine, Calif.-based Mazda was finally going to make up for 14 years of lagging sales.

Instead, it's South Korea's Hyundai putting huge footprints on Asian auto sales records. Sales through May are up 81 percent, to 99,930, enough to put it ahead of Mazda for the first time in the two brands' U.S. history. Mazda is up a scant 1.9 percent to 99,425.

"I think Hyundai may well beat Mazda for the year," said Gordon Wangers of Automotive Marketing Consultants Inc. of Vista, Calif.

Later this summer, both brands roll out new sport utility vehicles, both designed at their Orange County, Calif., design centers and aimed at Southern Californians. Over the next six months, the companies will spend millions to woo buyers.

A quick look at the stats:

Both new SUVs are hybrids based on a midsize car platform. That's the strategy that made Toyota's Camry-based Lexus RX-300 so successful.

Both offer a V-6 with substantial power.

Both will be available for less than $20,000.

Hyundai executives are counting on their Santa Fe SUV to finally make the Korean brand something to which people aspire. Mazda's counting on the Tribute to boost lackluster sales.

For Mazda, a company in the right place at the right time with its affordable RX-7 sports car and its retro-styled Miata roadster, the past six years were disappointing. Upscale automakers like BMW and Porsche and now Honda stole the Miata's thunder. Cars like the MX-6 coupe and the Millenia sedan were never marketed properly. And Mazda's 626 midsize car never stood out in comparison with Camry and Honda's Accord.

Faced with an oversupply of the cars, Ford, which owns a controlling stake in Mazda, and Mazda announced last month that they were cutting one-third of the work force at their joint venture in Flat Rock, Mich., where Mazda 626 sedans and Mercury Cougars are built.

Mazda and Ford are betting that things will be different with the Tribute. Loosely based on the 626 chassis, the Tribute has an optional 200-horsepower V-6.

It's built at Ford's Kansas City, Mo., plant and shares the same basic chassis and engines as the new Ford Escape. Mazda hopes to sell 20,000 of them in the first year.

The first Hyundais brought to the United States in the late 1980s were so unreliable they led to a 10-year decline in sales. That only really began to reverse last year when Hyundai offered a 100,000-mile "decade of dependability" warranty.

Wangers says Hyundais are much better than they used to be. But it's still difficult to get many consumers to consider them. One tactic that Hyundai has been using is fleet sales to major rental chains, a sneaky way of getting more people to drive Hyundais. Next year, Hyundai goes further up-market with the $24,000 XG 300.

Finbarr O'Neill, chief executive of Hyundai Motor America, hopes the coup de grace will be the Santa Fe, designed at Hyundai's Fountain Valley design center. Based on a Sonata platform, the 185-horsepower Santa Fe V-6 offers strong acceleration and near car-like drivability, in a high-riding, rugged package. Hyundai will trot the Santa Fe out for U.S. automotive journalists this month.

"The reception the Santa Fe gets will be critical to our success," O'Neill said.

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