Under the Microscope: We talk to Hyundai's President and CEO
18 December 2017
Author: Debbie Wood
Uncertainty. It's a word that we've used a lot in recent months to describe the motoring industry. With Brexit, taxation changes, and a wealth of new technology and methods of propulsion coming to market, we're now entering a period of significant change in the UK.
Uncertainty brings its own set of challenges, and has been a big reason for a drop in new car sales this year.
Despite the financial and political challenges, Hyundai is one of Europe's fastest growing car brands in the UK and has set a goal of becoming the number one Asian manufacturer globally. The Korean firm has had a busy 2017, with the new i10 and i30 range, and the Kona all coming to the UK - and, according to president and CEO Tony Whitehorn, this is only
A five-product brand
By the middle of next year, the oldest car in the firm's line-up will be the Ioniq. A grand total of 11 cars will be launched in 2018, some entirely new to the range, and nine will be launched the year after that.
It's fair to say that Hyundai has always been seen as a rather 'sensible' car brand; however, emotion is something Whitehorn is keen to inject into the brand moving forward. He believes the latest wave of new Hyundai cars deliver just that.
93,000 is the number of cars Hyundai expects to sell this year
"Whether you're a retail person or a user chooser, or even an outright fleet individual, everybody buys a car based on emotion and just what we're doing with the new i30 N adds a huge amount of credibility," Whitehorn tells BusinessCar. "Although people say fleet is all about a rational purchase, it's really an emotional purchase that they'll then rationalise. The Kona has also just been launched, which is great news for us and yet again it adds a little more emotion to the range; it's what we've been missing and goes into a B segment that is massively expanding. We want to add that emotional appeal."
Whole-life costs are crucial for Hyundai; and because employees today can demand more, and most companies offer more choice than ever before, having an expansive range is also key.
Historically, Hyundai has been a small-car brand; however, the firm's biggest-selling car in 2016 was the Tucson SUV, which is set to reach sales of around 30,000. The next biggest seller is the i10, which is predicted to reach 23,000-24,000 in sales and then the i20 at the 15,000 mark. Finally, there is the i30, which is expected to sell around 10,000.
"The good thing about us is that we're not reliant on one vehicle, which too many manufacturers are. If the market sneezes, then they get a severe cold. We're nicely spread. We're looking to sell around 12,000 of the Kona next year, so we'll become a five-car franchise, which I'm very happy with," Whitehorn says.
A diesel tragedy
You'd have to be living under a rock in the middle of the North Sea to miss the backlash on diesel over recent months, and its decline is pretty much guaranteed now the government has placed an expiry date on the traditional combustion engine.
The Ioniq has also been a huge success for Hyundai and, according to Whitehorn, made a statement on what the firm could do in terms of alternative fuel. However, although Hyundai has significantly invested in alternative fuels and has a number of new cars about to be launched offering a variety of different propulsions, Whitehorn believes diesel's fall from grace is not only unjustified, but also very sad.
"It's a tragedy, because for a lot of people diesel is still the right option. If you're doing long journeys on the motorway, invariably diesel is still the best option for you," he explains. "We're not as reliant on diesel as many other manufacturers and we can be very flexible. For the manufacturers that have alternatives, they're the ones that are going to respond very quickly to the marketplace, and you've got to be a global manufacturer with very deep pockets to be able to do that.
The demise of diesel technology will leave many manufacturers under strain in the years to come, especially those, according to Whitehorn, who have put all their eggs in one method-of-propulsion basket. The firm's biggest-selling car, the Tucson, had only a 9% petrol share this time last year. Last month, it stood at 49%, a massive change in such a short space of time.
"This is no longer Treasure Island and motor manufacturers are starting to pull away from the UK."
"A lot of manufacturers have invested in just one type of propulsion, which is dangerous," Whitehorn says. "You have to go down all routes; my belief is that fuel cell will be the ultimate answer, and EV, HEV and PHEV will bridge the gap to get there."
For fuel cell to be a success in the UK, Whitehorn admits that there needs to be significant investment before manufacturers will see any real return, alongside infrastructure and the right incentives in place.
"For us going into fuel cell, we lose millions of pounds today, but it's an investment for the future," explains Whitehorn. "With fuel cell, what has to happen is a three-pronged attack. You need investment from motor manufacturers; there has to be infrastructure, which is the biggest issue currently; and the only way that infrastructure can work is through the third strand, which is the government. The infrastructure will not come until the government puts in place incentives and penal actions to make fuel cell a viable alternative."
Next year, Hyundai will bring out a new right-hand drive fuel cell SUV. Any further information is staying firmly under wraps at this point, though.
"It's relatively simple to see where that end point will be, the big question is when, it's a massive investment for motor manufacturers," says Whitehorn. "As it gets closer to 2040, there will need to be more incentives and disincentives to make sure the infrastructure becomes more of a reality."
Next year will be a challenge
It's come as little surprise that the many political and financial uncertainties currently surrounding the UK have started to take effect on the automotive industry. Companies as well as private buyers are cautious to invest and, as a result, growth in the new car market has stalled.
Originally, Hyundai set a target of 100,000 car sales next year in the UK. However, Whitehorn is reluctant to set any growth targets now, with Brexit and the strength of the pound expected to bring considerable challenges in 2018.
"This year, we will sell around 93,000 vehicles; 100,000 for next year sounds like achievable growth, but next year will not be a normal market," he says. "Brexit brings uncertainty and the strength of the pound is also a key challenge for the market. The industry has put its prices up by around 6%, which doesn't cover all of the loss, but customers haven't had salaries go up and cannot afford the cost. This is no longer Treasure Island and motor manufacturers are starting to pull away from the UK."
According to Whitehorn, the publication of WLTP figures will cause a lot of confusion, and the whole industry will have to do a big education piece around the issue. Ownership may also change further as a result.
"I think more people won't want to own their car and take the financial risk, and it's the right thing to do, as none of us really know what is going to happen in the market over the next couple of years. Regardless, Hyundai is in a good place to deal with most challenges that come
our way," he says.