Nissan and Hyundai Ė Differing Paths
Revamped marketing programs, new products and enhanced reputations have fueled, to differing degrees, the rebirths of Nissan and Hyundai.
Hyundaiís reputation in the mid-1990s was of low prices offset by suspect quality, mundane packaging and the reality of no trucks or SUVs. Those circumstances pushed Hyundai into a deep penetration pit culminating in a miniscule 0.6 percent share of the total 1998 industry. Hyundai then began to regroup. Over the intervening years product satisfaction has moved Hyundai near the Nissan-brandís level, yet both remain below the averages shown in widely publicized 2003 rankings. Now prices continue to be utilized by Hyundai and rebates in the $1,000 to $2,500 range are in force. New products, the Santa Fe SUV and XG 350 upper-midsize car were added in 2000 and powertrain/component warranties have been stretched to 100,000 miles.
That flurry of activity brought Hyundaiís market share to 2.4 percent of the January- May 2003, total industry. Between the 1998 low point and 2003, Sonata, a lower mid-size car, picked up 0.4 percent, the basic-small car pair, Accent and particularly the Elantra, added another 0.7 percent as Tiburon held relatively even and the new XG 350 brought in 0.1 percent. Not unexpectedly, the addition of the Santa Fe SUV was a winner at a strong 0.6 percent. The oddity is that growth has been achieved from new vehicles without cannibalizing existing products.
Corporate Nissanís recovery pattern has been less aggressive following the dual low points of 3.9 percent of the total industry that occurred in 1998 and 1999. The Nissanbrandís quality has slipped from above average in the late 1990s and is now ranked slightly higher than Hyundaiís but remains moderately below average and is topped by all but one of eight comparably-priced domestic divisions. Yet Nissan-brand vehicles most probably enjoy a psychological benefit from simply being Japanese.
Infiniti owner satisfaction is another matter as it ranks third in the industry, falling below only two other prestige nameplates; one an import and one domestic. The aggregate quality reading now snuggle Nissan corporate numbers between General Motors and Ford Motor. On the marketing front, Nissanís warranty and pricing are within industry parameters for competitive price groups but are less incentive-aggressive than the domestics and some import competitors.
Share movements within the Nissan brands between the 1998 low point and today include a 0.3 percent gained from moving Altima up in size and content, 0.2 percent from the 350Z and 0.3 points contributed by the new Murano. Slight losses from Maxima, Sentra, Quest, Pathfinder and Frontier have held the combined Nissan brands to a modest 0.3 percent improvement. Infiniti, working with much lower volumes than Nissan, has managed to add an identical 0.3 percent, primarily by introducing the G35 mid-prestige car as a replacement for earlier vehicles. The end result is a corporate gain of 0.6 percent.
Both Hyundai and Nissan have reversed their U.S. automotive fortunes but to differing degrees. Hyundai, starting from a lower base has employed quality gains, new products, super-long warranties and aggressive pricing and has thus experienced a three-fold increase in market penetration from the 1998 low point.
Nissanís actions have been largely limited to new products that caused some moderate cannibalization, a course that has left market share short of the 1995 level and up moderately from their low point.
Affecting Nissanís actions is an old seafarersí axiom about size that is also true for the automotive world ó it is more difficult to turn a big ship than a small one. Also, Nissan is more profit oriented. But, it also appears reasonable to assume that if an automotive company is in trouble, additional or new products help, but much is also to be gained by attacking on multiple marketing fronts.