i40 reinforces two-prong strategy

Hyundai is continuing its tradition of pincer movements.

The latest marketplace to see a two-pronged attack from the burgeoning Korean marque is the medium segment. Where in its last generation, Hyundai's Sonata competed against the likes of Toyota's Camry and Honda Euro alone, the company's now established i45 has this month been joined by the i40 Tourer – a smaller, sportier and unashamedly European-leaning wagon.

The i40 was launched Down Under last week. Powered by a choice of direct-injected 2.0-litre petrol and 1.7-litre turbodiesel fours, the car was conceived and designed by the company's European team.

Its wagon execution is very European in character -- right down to the Audi-style load area cover with vertical mesh luggage curtain and load restraint rails and systems. It is set to sell alongside the i45 in Hyundai showrooms and will likely be joined by a sedan variant sometime in 2012 – though likely only in turbodiesel trim.

The i40's launch means Hyundai now offers two distinct model families in each of the Light, Small and Medium car segments.

i20 and Accent represent the brand in the smallest of the categories. In the volume-selling Small Car marketplace, the i30 and Elantra now jointly account for around 16 per cent share (VFACTS September 2011), positioning the brand in second place in the segment behind Toyota – ahead of Mazda 3! Now, the i40 and i45 offer the same potential for the marque in the medium car segment…

Hyundai Motor Company Australia (HMCA) Director of Marketing, Oliver Mann says the two-pronged strategy is not so much an attack, but recognition that HMCA is able to capitalize upon two pools of models to satisfy Australia buyers who are increasingly diverse in their tastes.

"It’s a reflection of the fact that Hyundai actually creates two pools of product. [i40 designer] Thomas [Burkle, present for the local launch] is part of the taskforce of people who creates product for the European market. And then we have [other models designed for] elsewhere in the world... We call it [the] General Market, which covers Asia including Korean domestic market, North America, Middle East and Africa," Mann explained.

"In Australia... this [market] is different from either North America or Europe. We [HMCA] draw product from both pools because we see that there’s a market opportunity for them...

Mann says that might "sound like there is the potential then to present a highly confusing range" but rationalises the lineup with examples of the company's 'logic'.

In the Small Car segment the differentiation is body type – Elantra is sedan only, while i30 (soon for update) is hatch and wagon.

"[In Light cars] it’s actually very simple, in the sense that now i20 is a 1.4-litre engine only, Accent is a 1.6 engine only," he says.

The i45 is Hyundai's medium segment General Market car. One of the largest cars in its class it is unashamedly aimed at the USA. In part this orientation has been a double edged sword Down Under, where Hyundai has attempted to gift the car the sort of European levels of steering accuracy and handling the i40 now demonstrates.

But says Mann, i45 is finding its feet. And i40 will give the company a quite different offer in the Medium car marketplace. He says Hyundai is not concerned about the new car cannibalising sales from its counterpart.

"Buyer behaviour is sometimes so irrational that you can’t... rule anything out. [But] I think you know we haven’t brought i40 in as a substitute or to cannibalise i45.

"We’ve brought the car in because we wanted to have a wagon offering to complement our sedan offering in the same way that there’s a Mondeo hatch and a Mondeo wagon...

"The interesting thing for me from Hyundai’s perspective was that the people who sell wagons [in the medium segment] actually do it very successfully... And therefore we look at i45 and there’s definitely some significant volume potential for us by using a wagon."

i45 is now selling at a rate of around 500-550 units per month, he says -- second in the category to Toyota's fleet-focussed Camry and ahead of private buyer favourites like Mazda6 and Honda Accord Euro. Mann sees i40 adding up to 400 sales per month to that figure. In a perpetually marginal medium segment that's good business.

"That’s [been] natural growth [in i45 sales] and I think that... sort of size is sustainable," Mann opines.

"I think we see between 300 to 400 [i40 sales] a month with free supply would be possible. [However] It won’t be that free [supply], possibly for, definitely [for] 6-12 months," Mann commented.

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