Hyundai plans 'modern premium' image campaign
Photo credit: Michael Shuster
NEW YORK -- "Someday, I dream of buying a Hyundai."
You're unlikely to hear that statement if you eavesdrop on an automotive focus group, unless it's composed of people who are still driving Yugos.
Yet that's the image that Hyundai hopes to carve out for itself as "modern premium." The term is Hyundai-speak for the philosophy that will guide a full-throttle marketing campaign launching in March designed to create an emotional tie that binds buyers to the brand.
Hyundai, not satisfied with being a value-only proposition in the U.S. market and anxious about customers who view it as an alternative to brands such as Honda and Toyota, uses the catchphrase "aspirational."
"You've got the old definition of luxury, about exclusivity and more about status," says Jim Sanfilippo, CEO of Innocean, Hyundai's agency in Huntington Beach, Calif. Hyundai's vision is to "be more inclusive, rewarding people in terms of design, and more reflective of the economic climate," he said. "Maybe Tiffany was old luxury, and Apple is about style and function that justifies a price premium."
The aim is to supply that halo to the overall brand rather than spin off a nameplate, like Toyota's Lexus. "We want to provide more than expected values and experiences to our customers across all segments, from small cars to luxury," said Wonhong Cho, Hyundai's chief marketing officer, based in Seoul.
From value to valuable
John Krafcik, CEO of Hyundai Motor America, underscored the new philosophy at the Detroit auto show this week. He said the brand is quickly shedding its roots as a purveyor of new cars for used-car prices and becoming a major player in the global industry.
Hyundai has raised transaction prices 14 percent since 2009 but maintained a strong reputation for value, Krafcik said. Hyundai has also cut vehicle rebates to just 18 percent of its incentive spending in 2011, down significantly from just three years ago.
"The orthodoxy inside the company just three or four years ago was, seriously, 'We can't sell a car without a rebate on the hood,'" Krafick said.
It's a striking statement coming from Korean headquarters, given that Innocean is part of the Hyundai conglomerate and that Krafcik has said that using Innocean is pretty much a mandate from the Seoul C-suite.
The move comes when Hyundai is on a high. In recent years, the company has hammered the value message with its "Assurance" powertrain warranty, a trade-in value guarantee and a job-loss protection plan that made it a friend of working people.
At this week's auto show, the automaker put a lifetime warranty on the Hyundai Sonata Hybrid's battery -- an obvious attempt to calm concerns about hybrd batteries following fires reported in General Motors' Chevy Volt last year after crash tests.
Hyundai has had stellar success with its "fluidic sculpture" models, the Elantra and Sonata; a racy hit with the sporty, three-door Veloster; and a performance entry in the new Genesis. It's also preparing a fully revised bread-and-butter model, the Santa Fe SUV, for April.
But Cho said despite the Hyundai group's growth -- some of it at the expense of the Japanese, affected by last year's tsunami and earthquake -- he hears footsteps. "The Chinese, the Indian players, will be a threat to us in three years, in five years," he said. "We can still make a lot of improvements."
"Modern premium is a very serious subject around here," Sanfilippo said. "We're not the only [automaker] that wants to succeed up-market. That's where the margins are."
Hyundai has been leaning in this direction for several years. In late 2010 it fired its first volley into luxury car sweeps with the $60,000 Equus, designed to compete with Lexus and Acura and ruffle feathers at BMW. Its tagline was "New Thinking, New Possibilities." Cho insists that the car met sales targets, though according to the Automotive News data center, only 3,193 models were sold in the U.S. last year.
The company also pursued an attainable-luxury position for Sonata last year with a TV spot that showed cops eating caviar on their squad car and kids playing with a Louis Vuitton basketball. (That image got Hyundai in hot water with the design group for using the logo without permission.)
But the new push is more ambitious in trying to encompass the brand.
A reinvention wouldn't be Hyundai's first reversal of fortune. Under Joel Ewanick, marketing chief from 2006 to 2010, and Goodby Silverstein & Partners, the brand launched its "Think About It "campaign, which stressed Hyundai's price, fuel economy and long warranties. Ewanick is now global marketing chief for General Motors.
Steve Shannon, the recently hired vice president of marketing, is overseeing spending now. The Hyundai brand was supported with $233.1 million in measured media from January through October of last year, according to Kantar Media. Hyundai Motor America bought two spots during NBC's coming Super Bowl broadcast, as well as a 60-second commercial before the kickoff. Speculation is that at least one of the ads will focus on Hyundai's workforce in Alabama.
Ryan Beene of Automotive News contributed to this report.