Hyundai Sonata Conservative Look Return Slow Sales

by Nov 3, 2014All News, Hyundai23 comments

When Hyundai launched the re-enginered Sonata sedan with more premium and bold design, Hyundai executives supposed to help reverse HMA sluggish sales, but the car described by some critics as a “bored” substitute for its popular and more organic Sonata YF is off to a slow start in the U.S. market.

The cool reception for the new 7th generation Sonata in Hyundai’s biggest market after China spells more bad news for the South Korean automaker which is battling intensifying competition and a strong local currency.

Hyundai is expected to post a 9 percent fall in its third-quarter net profit when it releases its quarterly earnings on Thursday.

Industry analysts say the new Sonata, launched in the United States in June, has struggled to stand out on design and value in a crowded field where rival sedans such as Nissan’s Altima and Honda’s Accord offer more attractive prices or designs.

In contrast, the Sonata’s predecessor helped Hyundai expand its U.S. market share after it was launched there in 2010.

“The new Sonata product super-exceeds the previous model in every way, shape, or form. But consumers are very much driven by what the vehicle looks like,” said Scott Fink, chief executive of Hyundai of New Port Richey, Florida, which is Hyundai’s biggest U.S. dealer.

“You used to be able to pick out the predecessor model anywhere on the road, in a parking lot. Now in some regards, you have to go to the front of the car and look at the logo to make sure: ‘Oh! that’s my car’,” he told Reuters.

A New York Times review this month described the new Sonata’s design as “bland” and “boring”. Reuters had earlier reported that Hyundai deliberately made the model less bold and more angular than its curvy predecessor to appeal to more conservative tastes in South Korea.

Hyundai sold 41,994 new Sonatas in the first four months following its launch in the United States, 13 percent fewer than its predecessor, according to Lee Sang-hyun, an analyst at NH Investment & Securities.

At home, sales have lost momentum, nearly halving to 6,861 in September from 11,904 in April when the model was rolled out, according to company data.

To reach its internal 2014 U.S. sales target of 92,500, Hyundai needs to sell nearly 17,000 new Sonatas per month for the rest of the year, more than the 10,500 cars it has sold, on average, every month since its June debut, said Suh Sung-moon, an analyst at Korea Investment & Securities in Seoul.

Hyundai declined to provide U.S. sales targets or figures and said it was premature to judge the new Sonata’s sales performance. Hyundai said its total U.S. sales are up 2 percent in the year to September, while data shows that overall U.S. car sales during that period rose 6 percent.

“Sales and marketing have not started in full yet,” Hyundai spokesman Zayong Koo said. “The feedback we get from dealers is that the more you look at the new Sonata, the more appealing it is.”

Apart from design issues, analysts say the Sonata’s higher pricing has dampened its appeal in the United States, where more consumers are now choosing sports utility vehicles over sedans.

A fully optioned Sonata costs over $34,000 in the United States, more than the $32,000 for a top range Nissan Altima, said Dave Sullivan, an analyst at consultancy AutoPacific.

Rival carmakers like Toyota and Honda also offer more incentives. In September, Hyundai offered incentives to buyers of $1,480 for each Sonata sold, compared with $2,297 for Toyota’s Camry and $2,036 for Honda’s Accord, industry consultancy Edmunds.com said.

Hyundai could help the new Sonata’s prospects in the United States by offering more buyer incentives, building lower-priced and less equipped versions and increasing marketing, said top U.S. dealer Fink. “It’s just going to take a little time. I’m optimistic,” he added.

Source: [Reuters]

Written by Jose Antonio López

Passionated about Korean cars from Hyundai, Kia & Genesis. Photographer. I love being in nature, hiking. Tech lover.

23 Comments

  1. bd

    The Accord is as “safe” as a design could be for a sedan and the Altima is hardly a looker.
    While Hyundai went too much much the other way with the new Sonata, the larger issue is the greater incentive spending by the competition (including Honda), bolstered by the low Yen.
    Price is king when it comes to the majority of US consumers.

    Reply
    • Mobis21

      I would agree with you except that U.S. sales of Sonata were trending down before the arrival of the “all new” 2015 model. 2014 October sales numbers show Sonata U.S. sales in decline by 22 percent compared to sales in the same period last year. Not encouraging.

      Reply
      • Ainnem Agon

        I believe in this argument. Sonata sales were way down the slope before the new generation was launched. I do not believe that the design was pretty much THE issue, rather the biggest one. A tougher competition may be the real deal here…

        Reply
        • Mobis21

          I’m with you concerning the link between the downward slope in sales of the Sonata and Hyundai’s retreat from the winning fluid sculpture formula that rewarded and catapulted their sales. The 2015 Sonata should have been given an exterior with a more elegant and transitional look rather than an overly sedate design which now makes the car almost invisible in a crowded field where even top competitor, Toyota, is now the standout among the midsize class going in the opposite (aggressive design) direction.

          Another hurting on the Sonata is its competitive but not class leading fuel economy. Which in this segment, Hyundai should have made a priority in topping its top competitors.

          Reply
      • bd

        Trending down for a model at the end of its life cycle is normal and the Japanese have really been able to pressure the Koreans on price due to the tumbling Yen.

        Ultimately, most American consumers are swayed by price/deals – which is why sales can fluctuate widely monthly due to whatever special deals there are that month.

        On the plus side, I would wager that the ATP for the new Sonata is higher than its predecessor – which already had a higher ATP than the Camry (which was a newer model).

        Reply
        • Mobis21

          I see your point on ATP (actual transaction price) but how does that help Hyundai on retail volume if its brand, spanking new model isn’t flying off the lots as the latest and greatest “slice bread”? See my point?

          Reply
  2. Jeff

    It looks too much like the previous model with a new nose and tail. If I buy a new car I expect it to be new and fresh looking, not something warmed over.

    Reply
    • aaron

      then you must really hate all German cars including gorgeous 911.

      Reply
      • Jeff

        Well I wouldn’t call the Sonata gorgeous, would you?

        Reply
  3. Mobis21

    Per Hyundai’s own reported 2014 October U.S. sales data shows overall sales are down 6 percent (http://hyundainews.com/us/en-us/Media/PressRelease.aspx?mediaid=41977&title=hyundai-motor-america-reports-october-sales). The story behind the poor showing of U.S. October sales are as a result the following:

    October 2014 Sonata sales fell to 15,563 compared to 2013 of 19,872 sales in the same month = 22 percent sales decline! This is not good news at all for the new 2015 Sonata and so far consumers and current Sonata owners have not been responding favorably to the new model. It seems Hyundai is forgetting that consumers value design just as much as they do function.

    Hyundai’s Chief decision makers in Seoul will pay the price for their ill fated decision to kill off the “fluidic sculpture” design rather than improve on it.

    Reply
    • bd

      Going to fluidic sculpture 2.0 isn’t the problem (the Santa Fe Sport and Santa Fe) are probably the 2 best looking Hyundai models right now whereas the current Tucson is still awkward-looking to say the least.

      The problem was execution on the new Sonata, but it’s still too early and can’t really go by month to month comparisons.

      Reply
      • Mobis21

        A look at data when the new 2011 Sonata launched shows that it was not only well received but consumers responded positively with strong, early sales. A stark difference to consumers lukewarm response to the debut of the 2015.

        Reply
  4. thekcb

    I think that with this data, Hyundai needs to think again about to the next generation models, like with the Elantra, to debut during the next year. Maybe Hyundai have time to move back to Fluidic Sculpture 1.0, because the Elantra is Hyundai best-selling model and it will be a total hit if it happens the same than with the 2015 Sonata

    Reply
    • Mobis21

      You are absolutely correct.

      Reply
  5. Sid

    Good Hyundai should just focus on the reliability and value than the bling bling and sales

    Reply
    • Mobis21

      A strong, dynamic, innovative car company should be able to do both.

      Reply
      • aaron

        Agree. Better design doesn’t cost much more. Hyundai really failed with this Sonata. Not just boring, but it’s just unattractive from almost every angle.

        Reply
        • Mobis21

          I’m afraid Hyundai has returned to its designed-for-Korea recipe that Krafick help steer the brand away from. Not renewing his contract was purely a dumb move by Hyundai’s Corporate Chiefs.

          Reply
  6. aaron

    Blaming on strong incentives from other manufacturers only go so far. If you had a truly superior product with killer looks, it would be highly desirable and buyers will be willing to pay the price. You take away the killer looks – as it happened with the new Sonata, you are now left to fight with pricing which is simply a losing game.

    Reply
  7. JRFL

    I had a 2011 loaded YF Sonata with the Turbo 2.0L engine. Everywhere I went I got compliments on how well the vehicle looked. I feel sorry for the 2015 LF Sonata owners. They will never hear that. It is surely the boring look of the the new Sonata that will kill its sales.

    Reply
  8. leigh landry

    I sent Hyundai a very not so nice letter and told them that this piece of scrap metal would suck and here we are! I literally can’t tell the Hyundai sonata, first fusion and Subaru legacy apart…

    I had the 07 platinum edition…it was in perfect condition until an idiot got on the freeway texting and driving and slammed into the back of it. 40,000 5 years old when it was totally ruined. I still miss my car!

    Hyundai really needs to stop designing ugly cars…as long as they keep making ugly cars, we just won’t buy them

    Reply
  9. leigh landry

    Everyone wants to keep up with competition… just because Ford had a good outcome doesn’t mean for Hyundai to go out and duplicate it and threw some sparkly lights on it and expect us to love it. While I understand forward thinking, sometimes consider what the consumer wants…look at the success Hyundai enjoyed with the 2005-09 models….you literally see them everywhere. why? because it was an awesome car. Now Hyundai has driven head first into the pool of conformity. Go back to the drawing board and create! not duplicate!

    Reply

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