Hyundai MPG Focus Nets U.S. Sales Boost
By Danny King July 18, 2011
Hyundai said last week that it's selling more U.S. vehicles that get at least 40 miles per gallon highway than the rest of the auto industry combined, indicating that the South Korean automaker is using its emphasis on fuel economy to overcome past questions of reliability and close the gap with better known imports such as Toyota and Honda. The automaker earlier this month reached the 100,000-vehicle sales mark for 40-plus mpg highway vehicles for 2011, giving Hyundai another opportunity to promote its so-called "4x40" strategy. Hyundai sells three vehicles -- the Elantra, Accent and Sonata Hybrid -- that get at least 40 miles per gallon highway. Hyundai's Veloster, which debuts this fall, while give the automaker a fourth high-MPG vehicle.
"Using a mix of technologies to improve the efficiency of our standard, internal combustion engine vehicles, combined with the smart application of hybrid technology, we believe we are on the right path," said Hyundai Motor America CEO John Krafcik in a July 7 statement. Krafcik called 40 miles per gallon "a starting point" towards boosting overall fleet fuel economy over the next 15 years. With average U.S. gas prices having jumped from about $3.10 a gallon at the beginning of the year to almost $4 a gallon in early May, Hyundai's heavy pitch for fuel economy appears to be paying off. Through June, Hyundai Motor America sold 322,797 vehicles, up 26 percent from a year earlier. Overall auto industry sales were up 13 percent during the first half of the year.
Technology Agnostic
Granted, Hyundai's not the only company to make a big pitch for fuel economy. Toyota's long had a leadership role among the gas-mileage conscious because of its Prius hybrid. And Nissan and General Motors have both recently made big pushes for the Leaf battery-electric (BEV) and Chevrolet Volt plug-in hybrid-electric (PHEV), respectively. Where Hyundai differs is that it's taken a technology-agnostic approach. The company pointedly doesn't break out sales of the Sonata Hybrid -- that model sold 1,305 vehicles in June, according to Edmunds.com's figures, making it the third-most-popular advanced powertrain vehicle to the Prius and Leaf. Instead, the Sonata Hybrid, Hyundai's only hybrid, is grouped with the other 40-plus highway MPG vehicles when sales figures are disclosed.
"Hyundai is on a roll on just about any measure," David Cole, chairman emeritus for the Center for Automotive Research, told AutoObserver. "And, they have not been hit by the exchange rate issues that both the Japanese and Europeans have experienced." The success is a far cry from Hyundai's humble beginnings in the U.S. An offshoot of the South Korean engineering giant, Hyundai Motor Co. was founded in 1967 and began exporting the Hyundai Excel to the U.S. in 1986. The early U.S. Hyundais were more known for their low price and boxy design than any reputation for reliability. "Their biggest hurdle was overcoming the perception of bad quality, and that perception was well-founded in the early days," said Steve Witten, executive director, global automotive business development, at J.D. Power & Associates, in an interview with AutoObserver. "The quality wasn't there."
But the automaker gradually built its reputation in the U.S. and backed it up in 1999 by offering a 10-year, 100,000-mile warranty on all of its vehicles. As the company has shorn up its reputation, it has focused progressively more on fuel economy as a differentiator. Last August, the company said it would boost its fleetwide fuel economy for its U.S. cars and light-duty trucks to 50 miles per gallon by 2025, marking a 43 percent increase from Hyundai's goal for 2015.
Catching Up
Granted, the brand still has a ways to go when it comes to reputation for quality. On a scale of one to five, Hyundai scored an average of 3.35 when it came to J.D. Power's "predicated reliability" rating for its 2011 models. Honda had a 4.36 average, while Toyota averaged 3.94. Additionally, gas prices and, as a result, average vehicle fuel economy, have been falling, indicating that some prospective new-car buyers fall off the MPG bandwagon when gas prices get cheaper. Since its near $4 high in early may, the average gas price has fallen to about $3.60 a gallon, according to AAA.
Still, the most recent months may be a blip in what will continue to be a steady increase in fuel prices, causing even those looking for relative gas guzzlers to keep an eye on fuel economy and lending credence to Hyundai's marketing strategy, hybrids or not. "Hyundai's really on top of things in terms of marketing, and knowing what consumers are looking for," said J.D. Power's Witten. "No matter what segment you look at, fuel economy is an important factor."
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