Monthly Archives: November 2012

Hyundai court case

A lawsuit has been filed against Hyundai and Kia seeking $775 million in damage over them overstating the fuel economy of their vehicles.

Both companies had reported higher gas mileage rating on EPA window stickers than the cars were actually capable of. Both companies admitted guilt and are reimbursing 900,000+ customers who had bought affected vehicles.

While most models were found to be 1-2 mpg out on their true figures, some were awry by as much as 6 mpg.



PSA and Renault

French car makers Peugeot and Renault have both suffered massive loses in 2012. Net profit for Renault dropped 39% in six months and Peugeot shares went down to €5.45, closing to their lowest even since 1986.

The two companies have been urged to work more closely if the French automobile industry is to gain a competitive advantage over the dominating German auto industry. Auto makers in Germany are cooperating in the development fuel cell technology for the automobile sector and French manufacturers should also be doing so.



Brand image

Within the European market (home of hatchbacks) Peugeot and Hyundai both have the same target group for their vehicles. The  introduction of the i-range by Hyundai to penetrate this market was a great success, competing with the X08 range of Peugeot’s. The i10 against 107, i20 against the 208, and of course, i30 against the 308.

Both companies have a “cheap” car image in europe, selling themselves with key phrases such as “economical” and “small running costs”. They are mainly targeting at everyday people who are just trying to get from A to B, with little cost and minimum effort. Even the top of the range brand new i40 Tourer and 508 are both less than £20,000 and is being sold for their “efficiency”.

906_hyundai_i10_1 modified-peugeot-107-korea 

The RCZ and Veloster are Peugeot and Hyundai’s attempt at offering something different, both are sold on the design of the vehicles and their performance.

In America however, Hyundai has a completely different brand identity to its European counterpart, whilst Peugeot stays pretty much the same. The i-range for Hyundai does not exist in America; the veloster which is at the top of Hyundai Europe’s price range has been dropped to the bottom in America, being one of the cheapest cars they have on offer. As previously mentioned, it is Hyundai’s objective to design cars that match the standard of luxury brands, and it is what they are exactly doing in America. They have a completely different brand image in America, which is quite interesting because there aren’t many companies out there doing this.

Paris_-_Mondial_de_l'automobile_2010_-_Peugeot_508_-_005  2013-Hyundai-Equus-front-three-quarter-1024x640

In the Asian market, Hyundai is considered something in between its European image, and American image. As someone who spent his early years in Hong Kong, I still remember the first family car that dad purchased. It was a Hyundai, a green Hyundai Excel. It was hideous, but it was cheap, which is what mattered most to my parents at the time. I remember it being so ugly that I thought to myself, “I would never buy from that brand when I’m older”.

Many years have passed since then, and I can honestly say that Hyundai is not the same as they used to be. Hyundai offers only the i40 out of the i-range in Hong Kong, and is only selling the Veloster and Elantra as alternatives. Same with Peugeot, as they only offer the 308, 3008, 5008 and RCZ. Hyundai and Peugeot are not common brands in Hong Kong, this is mainly because the tax rate on vehicles is high, but the insurance is low; so when people purchase a new car, they will either go for BMW or Mercedes if they are looking for something luxury, Toyota or Honda for something practical, or Nissan GTR and Lamborghini if they are looking for something sporty. There is not much ground for in-between brands such as Hyundai or Peugeot in Hong Kong as people want brands which are well known.


Hyundai – stepping up the weight category

Hyundai is currently sitting at the world’s forth largest auto-maker position. It has already secured its place in the economic cars market but the chairman & CEO of Hyundai Motor Group Chung Mong-Koo wants the company to  focus  on produce premium quality cars to compete with the likes of BMW and Mercedes.

As a company that made it’s place by building cheap and affordable cars, it seems like a massive risk to be up marketing like this, but the company seems to be finding its way to achieve its goal.

We can see a massive improvement in the design of Hyundai’s premium cars these past few years. The Genesis’s introduction was a warm welcome, and the luxury redesign of the Equus has certainly not been a disappointment.

However, let’s not forget that as of right now, Hyundai’s i-range products are what the company is known for, hopefully Hyundai will not lose it’s position in economic car manufacturer in this transaction.



Company’s Ownership and running

Peugeot and Hyundai are both listed companies on the stock exchange market, so the shareholders  of the 2 companies are constantly changing, but as Both Peugeot and Hyundai remained a “family” business, the people up at the top who makes all the big decisions still carry the company’s name.

In terms of ownership,both companies have given up a lot of their shares to investors. Hyundai family has only retailed 26% shares of the company; the remaining 74% are from other investors with the majority 43% of it coming from foreign investors.


Peugeot have done a similar thing with their ownership of the business, having only maintained 25.4% of the company’s shares. The French government have also recently pumped more money into the business to fund its financial problems and have a good amount to the share of the company.


Ownership wise, the two company seems to be very similar, but in terms of the company’s running, they are in two very opposite situations.

Hyundai Motors is a fairly young company, the business has only been passed down by one generation, and the control of the company is still fairly closed off. As the chairman and the CEO of both Hyundai and Kia group is Chung Mong Koo, the company’s directions are predominately in his hands. If there is a conflict of interest into the running of the company, he is also in charge of the company’s board members, which gives him further control of company, even if other shareholders are not happy with the way the company is going.

Peugeot on the other hand, has been around for over 200 years and passed down many generations, the structure has been heavily diluted and the company has numerous CEOs and chairmans within the company. This means that there are more opinions thrown towards the direction of the company, and less predictable outcome of how companies will work.

In terms of subsidiaries, both companies are parent companies to numerous firms, most notably Kia and Citroën.

As of December 2011, Hyundai has 33.99% ownership of Kia Motors, making them the majority shareholder and have full control over the company. Peugeot also holds 31% of Citroën’s shares and have 48% voting rights, granting them full control over the company also. However, Peugeot and Citroën have a more separate identity than Hyundai with Kia.


Peugeot’s struggle

Peugeot is facing further finical struggle as shares drop down to €5.45; a new low for the company since 1986. Peugeot have approached the government in further borrowing of €7bn to try and rescue the company, but cash doesn’t come freely. What will Peugeot do in return?

Peugeot have already scrapped more than 10,000 jobs and a domestic plant to stem losses approaching €200m a month, while developing future vehicles with General Motors to deliver more savings in five years’ time.

Peugeot is not the only struggling automotive company, the decline in demands have affected other car giants such as ford, GM and Fiat.

The decline in demands could be linked to the increasing Asian automotive market. Also, cars are discretionary expenses to many individuals and this type of spending reduces in a recession as people tend to refrain from spending on luxury items while there is unemployment riskand decrease in wages.



Hyundai – Increasing profit

Hyundai continues its success and have increased its quarterly net profit by 13% to $2 billion.

Its July to September net profit rose to 2.17 trillion won ($1.9 million), above their market forecast and up on last year’s 1.92 trillion won.

Politics have also been kind to the South Korean based manufacturer. As the island dispute between China and Japan goes on, Japanese rivals have been hit with a  decrease in demands, which benefits Hyundai’s sales in China.