Better late than never? Hyundai seeks to plug SUV gap

Sun Jun 7, 2015 5:04pm EDT
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By Hyunjoo Jin

SEOUL (Reuters) - Hyundai Motor, whose sedan-heavy lineup has held it back in a U.S. market powered by sport utility vehicles, is considering developing larger SUVs based on its Genesis luxury sedan, four people familiar with the matter told Reuters.

However, it could take two or three years for the vehicle to go on sale and the South Korean firm's poor track record with bigger SUVs, and its lack of pickup trucks, underscore the challenges in cracking the high-margin market for utility vehicles dominated by U.S. and Japanese rivals.

There is no certainty Hyundai will bring the new vehicle to market, one of the people said, given concerns about its lack of brand power in the higher-priced SUV segment, and whether oil prices could surge again and erode the market for gas-guzzlers.

"We are timid when it comes to bigger SUVs," said the person familiar with Hyundai's vehicle development who did not want to be named as he is not authorized to speak to the media.

The automaker is considering an internal proposal made last year to develop Genesis-based SUVs to fill a gap at the high end of its SUV range, said a second person with knowledge of the matter. The aim would be to plug into the appeal of the Genesis to elevate Hyundai's overall brand image.

U.S. sales of the Genesis jumped by more than a third in January-May to nearly 15,000, far outpacing Hyundai's overall sales gains of just 2 percent.

At the end of next month, Hyundai will halt production of its biggest SUV, the Veracruz, according to the newspaper published by its South Korean labor union. Last year, Hyundai sold fewer than 5,000 of its Veracruz, all in South Korea, compared with 54,325 globally in 2007.

Hyundai confirmed the discontinuation of the Veracruz, but said "this does not mean we are giving up on a large SUV line-up."   Continued...

A visitor walks past a Hyundai Motor logo at a Hyundai dealership in Seoul in this file photo taken on April 25, 2013. REUTERS/Kim Hong-Ji