Sonata incentives pile up as Hyundai tries to meet sales goals
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Moving 150,000 units of any vehicle is no easy task, and it looks as if Hyundai is learning this the hard way with its recently introduced Sonata. The incentives continue to climb - currently they're averaging just over $2,000 per vehicle - and fleets currently represent 30% of the Sonata's sales. The car is sitting on lots longer, with the "turn" time climbing from 41 days to 74 days. Transaction prices have also slid, dropping by over $900 in the last six months. We're not sure that this is what Jerry Flint had in mind with his warning last week about the Korean automakers, but certainly it's not a great situation for a brand-new model.
Hyundai has stated that the increased fleet sales are a good way to get "butts in the seats", and the increased turn time is being attributed to a production increase that ensures sufficient dealer inventory before the manufacturer's Alabama plant starts Santa Fe production this summer.
More than anything else, this goes to show the difficulty of cracking into the highly-competitive midsize sedan market. Nearly every competitor is throwing its best effort into this class, and indeed the segment as a whole is seeing increased incentives and longer turn times. The upside is that consumers have plenty of great midsize sedans from which to choose.
[Source: Automotive News]
Reader Comments (Page 1 of 3)
Peter 10:10AM (3/29/2006)
And to think that the new Sonatas actually sold at MSRP for a short period when they first hit the dealerships. I wonder what the "gotta have it now" morons, er, people are thinking today, when they hear about all the incentives?
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hj 10:13AM (3/29/2006)
Gee I can buy an accord or a cheap korean knockoff that's a copy of the previous accord. which one will I buy........
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Tankstelle 10:18AM (3/29/2006)
I just drove one of these recently as a rental car. I gotta tell ya, I have no idea what all the Hyundai lovers on this site are talking about. The steering was pathetic, the power in the 4 cylinder was pathetic, and the interior was pathetic. Now we're hearing about how corrupt their corporate headquarters has been. I hope they fail miserably. I sincerely hope that people who consider this car at least look at the G6 and Fusion. It's really sad when Americans support corrupt foreigners - and even sadder when they do so by buying an inferior product. And please spare me all the value talk. The residuals on these things are horrible. You'd have to hold onto it for 10 years to take that out of the equation. It's no surprise that Civic is so successful given the alternatives.
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joe 10:19AM (3/29/2006)
If I remember correctly, didn't Hyundai jack up their prices since their lines were selling so well?
They probably have some wiggle room since the increase with regard to incentives, but still not good to have 74 days worth of vehicles on the lot...
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Brandon 10:31AM (3/29/2006)
The American consumer has a long memory. This is no different than the uphill battle being waged by GM and Ford against perception.
Hyundai, for nearly 20 years, was the cheapest, least safe, least reliable vehicle you could buy. Even with the reliability of their efforts from the recent past, a large chunk of the public still views the name plate as third-tier at best.
It's going to take a while to convince owners of other brands that today's Hyundai is not the same one that pumped out $8000 Excels years ago.
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Glenn 10:38AM (3/29/2006)
Tankstelle - Somehow I doubt the domestics are much better. I haven't driven a G6, but I was totally unimpressed with it sitting still and I have little reason to believe it's better in motion. The Ford Fusion is a Mazda 6... I mean a really ugly car based off the Mazda 6... yawn.
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Matt Keegan 10:39AM (3/29/2006)
And to think that Hyundai is considering marketing cars further upmarket, even above the recently released Azera:
http://thearticlewriter.com/autowriter/hyundai-equus-are-your-ready-for-a-korean-v8/
Anyone else think that Hyundai is being "schooled" by the competition?
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source1 10:49AM (3/29/2006)
yeah, a lot of publications are all wrong about this car and probably about 130,000 to 150,000 consumers this year, too. Of the mainstream mid-size sedans, only the Accord has not offered incentives.
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Michael Karesh 10:51AM (3/29/2006)
People have long memories, and they're trying to grow too fast.
Their logic WRT fleets is valid, though. Every time my father rents a Hyundai or Kia he feels compelled to tell me how much better it was than he expected.
The Azera is a dud. Way too fuddy-duddy, and the ride/handing isn't there. The Sonata lacks the moves of a sport sedan, but otherwise is a fine entry. Problem is, much of this segment is owned by Toyota, Honda, and, to a lesser extent, Nissan.
Using http://www.truedelta.com, I find that that the Sonata V6 comes in abotu $6,000 below an Accord V6 and $5,000 below a 2007 Camry V6. Invoice-to-invoice the gaps are about $1,000 smaller. That's still a sizable difference--I'm actually surprised more people aren't biting.
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Brian 10:54AM (3/29/2006)
Great -- More people to pimp their blogs.... sigh
Hyundai is in a totally different position than the domestics when it comes to pricing their cars and selling to fleets. They do not have the UAW and overpaid employees to deal with, not to mention their volume is alot less.
Personally, if you are going to set the bar high and attempt to hit it, you need to try all methods of doing it. Fleet sales are NOT bad, the are just bad for GM, Ford and DCX due to the situations they are finding themselves in, with todays marketplace.
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David 11:21AM (3/29/2006)
The Sonata also performed very well (5 star) in crash tests, for what it's worth. Guess they copied the Accord and Camry there, too.
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Robert 11:22AM (3/29/2006)
#3 "It's really sad when Americans support corrupt foreigners"
So corruption is just a foreign problem?
MARCH 29 2006: GM has just received Securities and Exchange Commission subpoenas related to selling and then repurchasing precious metals and a federal grand jury subpoena relating to supplier credits.(Bloomberg.com)
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Source1 11:43AM (3/29/2006)
It's going to take a while to convince owners of other brands that today's Hyundai is not the same one that pumped out $8000 Excels years ago.
Actually, the Koreans last year convinced nearly 800,000 Americans of their brand and over $2million worldwide. This year, Hyundai will outsell Honda worldwide. They also convinced several major auto publications to recommend their brand. JD Power has officially stated several times in the past few years that Hyundai is a leader in brand quality transformation and quality gains.
Oh and Hyundai has already invested over $2billion in US and created over 5,000 jobs directly/indirected with their auto plant. That will increase to $4 billion and 10,000 jobs when the Kia plant is up and running. Only past-glancers are ignorant of Hyundai's remarkable transformation.
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Optimus Prime 11:52AM (3/29/2006)
Sure there's a huge price difference between comparable Hyundais and Toyotas and Hondas ... and it works to the cosumers advantage and somewhat Hyyndai since they sell more cars. But, the price difference is there because people are not yet willing to pay Honda/Toyota prices for a Hyundai .. prices which Hyundai would charge in a heartbeat if they could get away with it.
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bob 11:55AM (3/29/2006)
Tankstelle thinks he knows about the automotive industry. He doesnt. He even suggested buying domestic like a Fusion or a G6. Get a life! Does he work for GM (soon to be banko) or Ford (also soon to be banko). He is still probably driving his 1982 Camora rusted out sporting his coooool Mullet. What a goof. He complains about handling and power.
He doesnt even know that the Sonata and the Azera won the AJAC award for best new mid-size under 35K beating out compeditors like the Accord and Camry. Oh yah thats right he still domestics make a good product. He should just move out of his mom's basement cut off the mullet and get up to speed with the rest of the world. People like him make me sick cause they ramble on with nothing to back their arguments
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JIm 12:29PM (3/29/2006)
If price were not an issue which would rather have, Sonata, Accord, Camery? Okay now with the price difference which one? So...you save $3-$5K at purchase. Five years from now when you're ready to trade what do you think the difference will be.
As for the G6, well GM really hit the mark with that one...better than a Neon, not as good as a CIVIC.
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Tankstelle 12:31PM (3/29/2006)
Who the f is AJAC? Best car under 35k? Gee, let me think, Hyundai Sonata or BMW 325i...
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Greg 12:53PM (3/29/2006)
LoL Tankstelle. The Hyundai Sonata has gotten outstanding reviews from unbiased journalists all over the world. Check Edmonds or Canadian Driver, for example. AJAC is the Automotive Journalists Association of Canada and yes, they have ALOT of credibility. Also, its $35 000 Canadian dollars not American, you bigot. You make such judgements from one rental car ride, when thousands of Journalists have differences in opinion, it looks like your not being very objective. Actually, I'm not sure you even rented a Sonata. Considering your obvious bias towards Hyundai that you've demonstrated over and over on Hyundai comments sections, I could even believe you've made up you "renting experience" only to bad-mouth this car. Next time you try to untruthfully discredit a car brand because of your narrow-mindedness, at least change your user name so that you have some credability, because its obvious that "Tankstelle the bigot" has none when it comes to talking about Hyundai vehicles.
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Greg 12:56PM (3/29/2006)
Btw, I OWN this car and did alot of researching on reviews before buying it and with incentives, got a great deal on a GREAT CAR. I think I have more crediability than you.
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Yoda 1:04PM (3/29/2006)
AJAC is Automobile Journalists Association of Canada, and its $35,000 canadian (not USD)
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