Hyundai, which has stormed to the front ranks of global automakers in the last decade while earning impressive quality ratings from J.D. Power and others, has had a lineup light on crossovers -- defined as SUVs built on car (rather than pickup truck) architecture. Demand for crossovers is borderline insatiable at a time when Hyundai's lineup has been heavy with sedans such as Elantra and Sonata.
Hyundai's global sales were down 3.2% through June, leaving it less than halfway to its goal of selling more than 5 million vehicles this year. In the past year, Hyundai shares have dropped 44% in price while the Kospi Index of South Korean stocks has gained 5%.
"We see Tucson as the right vehicle for the U.S. and other markets. It's going to help us regain share in a segment where we've lost ground," said Dave Zuchowski, chief executive of Hyundai's U.S. operations. "And we're looking at adding other crossover models as well."
Hyundai's new Tucson features bolder, expressive exterior styling; larger wheels as an option; more high-strength steel improving rigidity and handling; as well as an array of comfort and safety features such as a hands-free liftgate and automatic emergency braking. Top contenders in Tucson's category include the Toyota (TM - Get Report) RAV4, Honda (HMC - Get Report) CR-V, Nissan (NSANY Rogue and Ford (F - Get Report) Escape.
The Tucson's retail price starts at about $24,000 and rises to more than $34,000, depending on optional equipment and features. The first vehicles could reach dealerships within 60 days.
In 2010, Hyundai sold nearly 40,000 of the previous generation Tucson, which accounted for 4.2% of its segment. Through last year, sales rose to 47,306, but share of the segment fell to 2.7% due to production capacity constraints and a flood of new competitors.
Hyundai forecasts that it will sell 90,000 of the new model next year, thanks to a new assembly plant in the Czech Republic, freeing up Tucson capacity in South Korea. U.S. Tucsons will come from South Korea.
Without giving specifics, Zuchowski said that Hyundai is also "looking at" a subcompact crossover for the U.S., similar to the Hyundai Creta sold in India and other emerging economies. The company also is considering a luxury crossover based on its Genesis sedan.
Hyundai and its South Korean affiliate, Kia Motors (KIMTF, currently have 8.2 million units of production capacity worldwide combined, operating at 100% of capacity, Zuchowski said. But the automakers no longer operate under a self-imposed moratorium against adding new capacity. Hyundai lifted the moratorium in 2014 following a three-year period of caution, after observing quality problems encountered by Toyota due to rapid sales growth.
But an economic slowdown in China and questions about European demand in light of the Greek financial crisis have injected new notes of caution, Zuchowski said. Deciding on adding new plant capacity for the U.S. "will take a little longer," he said.