SEOUL – Demand for Hyundai cars in the growing Russian market is so strong that Hyundai is having trouble keeping up.
“We are expanding very rapidly in the Russian market,” says Kim Jae Il, Hyundai’s senior executive vice president for international operations.
“But since the pace of growth is too fast for our expectations, we are having problems providing parts for our assembly partner. We are working to increase our capacity.”
Last year Hyundai more than tripled its new-car sales in Russia to 50,686 units, taking second place among non-Russian brands behind Chevrolet, which sold 56,514 of its Niva and Viva models. Those are built in Togliatti, close to the Black Sea, in a joint venture with AutoVAZ.
Hyundai now offers 12 models in Russia, and its aggressive pricing strategy, backed by advertising, has led to significant gains in sales and overall market share.
In the coming months, Hyundai will introduce the new Sonata large-segment car and the face-lifted Getz small-segment car in Russia. In January 2006, the redesigned Santa Fe large SUV joins the lineup.
Russian distributor ZAO Carnet-2000 is rapidly expanding its network, with plans to add an extra 11 dealerships in 2005 to the existing 10 showrooms in Moscow, three in St. Petersburg and a further 29 elsewhere in Russia.
“We aim to be No.1 this year. But our ambition depends on supply. There are also some shortages of completely-built cars,” said Svetlana Belysheva, marketing director for ZAO Carnet-2000.
Delivery times on new Hyundai models varied from two weeks to two months, Belysheva said.
Hyundai is successful in Russia because it has a good product mix, with 12 passenger cars, said Belysheva.
Also, significant investments in national advertising and aggressive public relations campaigns have built a perception of good value for money, said Belysheva.
Besides Carnet’s dealerships, Hyundai’s Russian assembler, TagAZ, has other outlets, which also sell both locally assembled and Hyundai models.
About half of the Hyundai cars sold in Russia are built by TagAZ from complete knockdown kits. The rest are imported from Korea.
TagAZ assembles the Accent and Sonata models locally.
In 2005, Hyundai aims to more than double this local production to 70,000 units from 26,940 – and to reach total Russian sales of 114,000 cars.
The surge in demand for Hyundai models contrasts with the April announcement by GM-AvtoVAZ that it would cut production by more than 25 percent in 2005.
The joint venture between General Motors and Russia’s AvtoVAZ scaled back production plans from 75,000 units to 55,000, on the basis of “doubts that the market could swallow that number of
our cars,” spokeswoman Irina Shemyakina said.