Hyundai cuts costs as SUV boom looms: report

Hyundai may appear to be one of the world's most successful automotive brands, but a lack of SUV and commercial vehicle models has actually seen the brand's sales drop, along with its share prices.
- shares

A report from Reuters states the Korean automotive brand is working to cut costs, going as far as taking away benefits such as annual flights home to expatriate Hyundai executives for holidays. Business class trips are also being scaled back, the report states, as well cut-backs on printing and lighting.

The cost-cutting is all part of a move to see the brand use every possible dollar it has to expand into growth segments in SUVs and pick-ups, according to the Reuters report. Hyundai's strength has been in offering sedans to a range of different markets around the world, but the automotive tastes of the world - even developing markets - has moved towards SUVs.


In the US market - Hyundai's largest by volume - the brand managed to increase its SUV sales in 2016, with a jump from 23 per cent to 28 per cent of its total sales, but that pales in comparison to its peers, which see up to half of their sales made up by SUVs.

In Australia, Hyundai's limited SUV offering has almost certainly held the company back - it doesn't have a small SUV to rival the likes of the Mazda CX-3 and Honda HR-V, nor does it have a more hardcore large SUV to tackle the 4x4 set (Toyota Prado etc). Then there's the lack of utility vehicle, which would certainly see its sales push higher.

Year-to-date in 2016, Hyundai Australia's SUV sales have accounted for 28 per cent of its total number with only the mid-size Tucson and large Santa Fe as part of its 12-model-strong line-up. Compare that to market leader Toyota, which had seven SUVs as part of its core line-up this year (FJ Cruiser stock ran out this year, but the brand will add the new small C-HR model to its range in early 2017), and its SUV range has made up 34 per cent of its YTD sales. If you include the HiLux ute range as part of that, the figure jumps to 54 per cent of its total.


"We're trying to address a mismatch between the market trend and our product line-up," the report quotes a Hyundai insider as saying. "That's a longer term plan. For now we're trying to save every penny."

Hyundai has shown small SUVs for other markets - the Creta was designed with developing markets in mind - but without such an offering in more developed markets, it will continue to be held back. A larger SUV with proper off-road credentials would also help, not to mention a ute (though the Santa Cruz ute has been ruled out for us).

Another insider said the company is in "emergency management mode", with executive hotel room bookings downgraded, travel budgets cut to encourage more online conference calls, and executive salaries cut by 10 per cent.

Hyundai is also being realistic about sales targets for 2017 - it is said to have dropped its target from 8.35 million sales to 8.2 million units.