Will U.S. consumers pay luxury prices for an economy car

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Will U.S. consumers pay luxury prices for an
economy car?

• Presented by
• Cheryl Clark
• Kristin Cobb
• Evan Rice

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Article Summary

• Hyundai introducing luxury brand
• 3 new models
• Korean manufacturer believes its time
• U.S. dealerships are skeptical of timeframe
  (2007)
• Ceiling on how much Americans will pay

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Company Overview

• 1967 Established Fords UK operations
• 1968 Voted Koreas 1 carmaker
• 1970 Building cars under its own nameplate
• 1974 Debuted the Hyundai Pony
• 1983 Began high volume production
• 2003 Annual sales of 38.9 million

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S.W.O.T Analysis

• Strengths
• Good rating by JD Power
• High perceived value
• Tradition of growth and good engineering
• 48 sales increase in 2002
• Weaknesses
• Division between U.S. executive and Korean
• Luxury line is Korean styled
• Marketing costs for launching a brand are
  enormous

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S.W.O.T Analysis

• Opportunities
• Development of new 3.5 liter sedan
• Truck development
• Threats
• Saturated U.S. market
• U.S. market not ready
• Stand alone dealers are likely to fail
• Acura struggled to maintain market share when
  they were first introduced

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Why do consumers buy luxury automobiles?

• Prestige
• Image
• Luxury
• Status symbol
• Amenities
• Comfort
• Quality

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What does Hyundai offer?

• Economy
• Value
• Fuel efficiency
• 10-year/100,000 mile warranty
• Are these the same as what luxury consumers are
  looking for?

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• Most Satisfying
• Small Cars
• Toyota Prius
• Honda Civic
• Mini Cooper
• Large Cars
• Honda Accord
• Toyota Avalon
• Luxury Cars
• Luxury LS 430
• BMW 3 series
• SUVs
• Lexus RX 330
• Infiniti FX
• Minivans
• Toyota Sienna
• Honda
• Trucks

• Least Satisfying
• Small Cars
• Hyundai Accent
• Nissan Sentra
• Large Cars
• Chrysler Sebring
• Dodge Stratus
• Dodge Stratus
• SUVs
• Suzuki Vitara
• Nissan Xterra
• Minivans
• Dodge Caravan
• Chevrolet Venture
• Trucks
• Nissan Frontier
• Dodge Dakota

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• CEO Finbarr ONeill says
• The company still has a long way to go to
  convince U.S. consumers that its acceptable to
  park a Hyundai in their driveways

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Conclusion

• Would consumers pay 50,000 for a Hyundai?
• Here is why we do not think so
• Image as an economy vehicle
• Too costly to market
• Perceived value of an economy car