Korean Carmakers Wary of New Sonata Launch

Seoul July 12, 2004; Kim Tae-gyun writing for The Korea Hearald reported that as Hyundai Motor Co. is poised to unveil a remodeled version of its top-selling midsize Sonata sedan next month, other local carmakers are escalating their efforts to deal with the stiffer competition in the midsize segment, industry officials said yesterday.

According to Hyundai officials, the model, designated as the NF Sonata, will feature a newly developed engine and overhauled design. The car will be a "totally different" breed from the previous Sonata series.

At present, the Sonata model is tops on the midsize sedan market with a 44.4 percent share.

Local carmakers are eyeing closely the new-car launch. "The impact of NF Sonata's launch will be tremendous. It will consolidate Sonata's No. 1 position and will pose a significant threat to its rival cars," said Sohn Jong-won, auto analyst at Goodmorning Shinhan Securities.

Mostly affected will be Renault Samsung Motor Co., Hyundai's strongest rival in the midsize sedan segment. The carmaker's flagship SM 5 models command a 30.7 percent market share after the Sonata following a facelift last September.

Renault Samsung officials said the company is already well aware of the NF Sonata threat, and will counter the competitor by gradually upgrading its models. "Our strategy for this year is keeping (the SM 5's) original design intact and improving in-vehicle amenities to meet various needs of customers," said Ha Tae-eung, Renault Samsung's general manager.

GM Daewoo Auto & Technology Co., the nation's third-largest carmaker, also plans to gear up marketing for its Magnus midsize sedan. The maker plans to highlight the car's powerful engine as a selling point.

"The Magnus' L6 engine shows an excellent performance and good fuel mileage but the feature has not been advertised enough in our previous marketing," said a GM Daewoo official.

The Korean affiliate of General Motors Corp. has been widely considered as a specialist in the compact segment and has been weak in other segments. The U.S.-based parent company said earlier this year that it will reinforce the affiliate's mid and large car lineups by introducing new models within the next two years.

Industry watchers point out that foreign carmakers' entry to the midsize sedan sector has raised competition even further.

Honda Motor Co., Japan's third-largest automaker, introduced its bestselling Accord here in May. The car sells for about 33.9 million won, compared with EF Sonata premium model priced at 25.89 million won.

According to Korea Automobile Manufacturers Association, the midsize sedan segment last year accounted for 21 percent of the local passenger vehicle market with 217,227 units sold.