Sources told Reuters that Hyundai is thinking about developing bigger SUVs based on its Genesis luxury sedan. The automaker’s lineup is mostly sedans and it wasn’t able to exploit the SUV’s popularity in the U.S. The sources said however that the vehicle may start selling two or three years from now.
Among the obstacles that the automaker faces with its attempt to compete in the high-margin market for utility vehicles is its poor SUV track record, its having no pickup trucks, and the dominance of U.S. and Japanese brands. It’s not known for sure if Hyundai will release this model to the market, according to one source.
There may be problems with its brand power in the SUV segment. It’s also possible that oil prices will go up and hurt the market for non-frugal vehicles. Another source said that when it comes to bigger SUVs, Hyundai is “timid.” The automaker is looking into an internal proposal submitted in 2014 to fill a gap at the SUV lineup’s high end with Genesis-based SUVs.
It’s believed that the Genesis’ appeal will carry over to the SUV to boost the overall image of the brand. In January to May, the U.S. sales of the Genesis increased by over a third to almost 15,000, doing much better than the automaker’s overall sales gains of only 2.2%. By the end of next month, production of the Veracruz (the brand’s biggest SUV) will be stopped.
In 2007, 54,325 Veracruz units were sold globally. In 2014, fewer than 5,000 units were sold, all in South Korea. However, Hyundai has said that it has not given up on a large SUV lineup. Hyundai sent an email to Reuters to say that the company is thinking of developing premium, large SUVs based on customers' needs.
It also wrote that it will respond to the fast-changing market focused around SUVs by “beefing up” its SUV lineup. Hyundai used to do exceptionally well in the U.S. Last May, Hyundai’s sales in the country declined by 10% from the previous year – its steepest drop in almost 5 years. In comparison, the market had a 2% gain.
In 2015, Hyundai’s shares have fallen 18% -- the worst performer among global auto companies. The weak yen had hurt it while benefitting Japanese automakers. In South Korea and the U.S., the sales of trucks and SUVs have been booming. Hyundai’s biggest market is China.
Its second-biggest is the U.S. while South Korea ranks third. Hyundai has no pickups and just two SUVs available in the U.S. (the compact Tucson and the midsize Santa Fe). On the other hand, Toyota Motor's US lineup includes eight SUVs and two pickups.