PARIS (Reuters) - Hyundai (005380.KS) will nearly double its share of the European car market to five percent in three years by leveraging the untapped potential of its brand, an executive told the Reuters Global Autos Summit.
European vice-president Allan Rushforth said on Monday that Hyundai volume has reached “critical mass” thanks to its success selling into the continent’s flurry of car-scrapping schemes, allowing it to enter a new stage of supercharged growth.
Enough Hyundai cars are now on the road for the brand to be an everyday sight in Europe, a market many executives believe to be the toughest in the world since it is highly saturated.
“The next few years for Hyundai mark a departure from market entry and telling people that we’re here, to developing our brand and convincing people of what we represent — brand image,” the European executive told Reuters in an interview.
Rushforth called Hyundai a “challenger brand” that for the moment lives off customers poached from other rivals.
“The difficulties that Opel GM.UL have experienced over the past one and a half years have given us an opportunity. They’ve lost market share and we’ve stepped into that vacuum, along with others,” he said.
“There’s no doubt we are increasingly on the Toyota (7203.T) owners’ shopping list when it is time to replace their car.”
He said it would be difficult in the longer run to achieve target market share by relying on sales to largely brand-loyal mature buyers. He plans to focus on a younger generation.
“For Generation Y and Z, the Starbucks-IKEA-Apple perception of brands replaces the BMW-Louis Vuitton-Chanel view of brands that might have existed for their parents,” Rushforth explained.
“There’s a whole generation of consumers coming through that don’t see cars in the way their parents did, that have a different view of mobility, a different environmental outlook.”
He also said Hyundai, along with other carmakers, would need to explore new business models that address changing attitudes, reflecting a new trend away from car ownership.
“Do we keep building cars and selling them, and leaving the provision of mobility to the leasing companies, rental agencies and other third parties, or can we take a stake in that in the way that mobile phone providers are mostly focused on service and access than the hardware itself,” he said.
Apple APPL.O convinced carriers to share revenue in return for an exclusive deal to sell the coveted iPhone, a tactic unheard of in the industry before the advent of the smartphone.
Speaking about the European market size, Rushforth said he expects it to be flat in 2011 at around 13.5 million vehicles, with a particularly tough first half, and will start to grow again only in 2012, by 5.6 percent to some 14.3 million units.
“I think the first half-year will be really, really tough,” Rushforth said. “Not only have you got the distortional effect of scrappage, but also a very difficult economic climate and the yet-to-be-felt effect of government spending cuts on consumer confidence.
“Beyond which, I think you’ll see scrappage wash out and then, at least optically, growth in the market from about June.”
He added: “I don’t see any reason why we shouldn’t sell half a million cars and achieve 5 percent share of the European market ... inside three years.”
Reporting by Gilles Guillaume, Christiaan Hetzner and Helen Massy-Beresford; Editing by David Hulmes