Strategy for US Market Sent Back to Drawing Board
Hyundai Motor has put the brakes on its plan to make a foray into the US diesel car market in line with the expansion of its SUV lineup. It was confirmed that the automaker has scrapped it plan to launch a diesel model of the new Santa Fe at the beginning of next year.
According to Hyundai Motor and the industry on July 29, vice chairman Chung Eui-sun recently ordered the North American regional headquarters and related departments to suspend the launch of diesel models in the US market and set up strategies excluding the US diesel car market.
Initially, Hyundai Motor planned to advance into the US diesel car market with the launch of the diesel model of the new Santa Fe next year. The strategy was based on an increasing demand for diesel engine vehicles in the US amid a growing popularity of sport utility vehicles (SUVs).
In fact, BMW has introduced a diesel SUV model in the US market while GM launched an Equinox model loaded with a 1.6-liter diesel engine. Launching diesel models was also part of Hyundai’s strategy to boost sales in the US market with a strengthened SUV lineup, which included the large-sized SUV Palisade and the small pickup Santa Cruz.
Some experts say that vice chairman Chung’s abrupt decision to halt the initial plan was prompted by the US government’s move to slap a tariff of up to 25% on import cars. "Although demand for diesel-powered vehicles has increased recently in the US market, gasoline cars still account for more than 90% of the US vehicle demand," said a senior official in the Korean automobile industry. “Hyundai Motor may have felt a big burden about making a foray into the new market at a time when a great deal of uncertainty lingers in the vehicle industry."
The problem is that Hyundai Motor has to entirely overhaul its strategies on the US car market. Some analysts say that the automaker has already shelved an imminent plan to launch a pickup truck in the US market.