Hyundai Exec Considers How Gas Engines Can Deliver More Bang for the Buck
June 27, 2007

John Krafcik, Hyundai’s vice president of product planning and strategy in the U.S., pondered aloud over dinner last night which option would deliver more bang for the buck: investing in pricey hybrids and diesels to meet inevitably stricter fuel economy and carbon-dioxide standards or pumping smaller bucks into refining current gasoline engines.

“I think there’s more to wring out of gasoline internal combustion engines for a lower investment,” he said of the engines that have been around for well over a century.

Here’s Krafcik’s math: a hybrid costs an automaker an extra $6,000 per vehicle and diesels add $5,000 per vehicle. Making a relatively meager investment of $1,000 to $1,200 per vehicle into existing albeit smaller displacement gasoline engines, expanding use of turbochargers, superchargers, direct injection and the like, and adding start-stop mild hybrid technologies like those used on the Saturn Vue might be the better investment.

The question is would Americans accept smaller-displacement engines? They’ve adopted hybrids, and new clean diesels on the way appear to have a promising future. It was thought they’d pooh-pooh both. So maybe they’ll go for smaller powertrains.

In any event, Krafcik says right now product planning for automakers who don’t know yet precisely what fuel economy and CO2 standards will be, as they are yet to be set by government officials here, is complicated.

“We have to do parallel strategies and cover all of our bets,” Krafcik says.

A Diesel in Hyundai's Future

One way Hyundai is covering its bets is by adding a diesel engine to its U.S. fleet. Krafcik says a diesel-powered Santa Fe or Veracruz SUV could be in the U.S. in another three years or so. Diesel versions of both, particularly the Santa Fe, are doing extremely well in Europe, he adds.

Krafcik isn’t so hot on hybrids, largely because of the cost and the technical challenges with batteries, especially lithium ion batteries that General Motors and Toyota, in particular, are counting on for the future. He’s glad they –- and not Hyundai –- are blazing that trail.

“I question the long-term future of hybrids,” says Krafcik.

Genesis: a Sedan and a Coupe

As for other future products, Krafcik confirmed the production versions of its luxury flagship, Genesis, will make its debut at the North American International Auto Show. The concept was unveiled at this spring’s New York show.

The Genesis marks a significant step-up for Hyundai with the first rear-wheel-drive configuration and the first V8 engine for the U.S. market. It is also a test of how far Hyundai can stretch the brand.

Both V6 and V8 engines will be available from the start when the rear-drive sedan goes on sale in early 2008 as a 2009 model.

And yes, Krafcik says, there will be a coupe version. It will be rear-drive and only offered with a V6 engine. He wouldn’t provide timing for its introduction.

An Elantra Something or Other

At the Los Angeles show in November, Hyundai will unveil a yet unnamed new model -- the 2009 Elantra ___________. That blank to be filled in later this summer. Krafcik describes the Elantra whatever as being in the category of Mazda 3 and Scion hatchbacks. The sporty 2.0-liter hatchback is built in Korea and will be added to Hyundai’s plant in the Czech Republic. It goes on sale in the first quarter of 2008 with volumes eventually expected in the 20,000-to-30,000-a-year range.

Veracruz: The Next Elastic Test

Hyundai has been testing the elasticity of its brand with the introduction of its current flagship sedan, the Azera, and most recently with the Veracruz SUV with three-row seating.

The Veracruz currently is Hyundai's highest price model, starting at $26,305 and running up to $38,000, the price of the top-of-the-line model Krafcik drove to dinner.

Hyundai launches its national ad campaign for the Veracruz this summer, and then, will find out if consumers will pay that much for the Hyundai.

If the owner of the restaurant where we dined is any indication, Hyundai won't have a problem. The restaurant owner asked loads of questions about the vehicle, studied in the parking lot a few times and took it for a test-drive. He declared it quieter than his GMC Envoy, that he's turning in when its lease expires, a good value compared to more expensive nameplates and capable of handling the produce he buys at market daily for his eatery.

Posted by Michelle Krebs at 7:43 AM under Commentary , Companies , Technology | Comments (1) | digg this | Seed Newsvine