Monday, July 18, 2011

Financial Times - Hyundai steers its hybrids to a global arena

Five years ago, Lee Ki-sang, senior vice-president at South Korea’s Hyundai Motor, received an early-morning phone call in his hotel room in Japan. An important components supplier was cancelling a meeting at the last moment, offering only vague excuses.  Mr Lee thought he knew why. Hyundai had just started to plan a petrol-electric hybrid car and needed technical support and parts from experienced Japanese suppliers, which were under heavy pressure not to deal with the South Koreans. “The Japanese big two – Toyota and Honda – had big problems with their suppliers working with us,” he said.

Facing such opposition, Hyundai ultimately decided to develop hybrid technology in South Korea. This January, it introduced its Sonata hybrid in the US to compete with Toyota’s segment-leading Prius, Honda’s Insight and Ford’s Fusion.

The launch has come at an awkward time for more established competitors, in particular the Japanese, as parts shortages caused by Japan’s March tsunami have left Toyota and Honda with little inventory. Prius sales in the US dropped 61 per cent from a year earlier in June, according to the online car pricing service, Edmunds.com.

With hybrids accounting for just over 1 per cent of global automobile sales, the success or failure of the new Sonata might seem like a peripheral issue for Hyundai – the world’s fifth biggest automaker, when counted with its affiliate Kia, and one of the fastest growing. Its sales in the US surged 24 per cent last year, against a slight fall for Toyota.

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