In the UK, Korean cars have never enjoyed the same level of affection as their Japanese counterparts. To own a Honda or Toyota is to be progressive and cutting-edge; to own a Kia, until recently at least, is to hide it in the garage.
That all changed when the government launched its scrappage incentive scheme in 2009, offering consumers a £2000 grant in exchange for vehicles more than nine years old. While some manufacturers were sceptical, Korean sister brands Hyundai and Kia pounced on the deal with a blizzard of marketing activity.
Remarkably, Hyundai ended up selling more cars through the scrappage scheme than any other marque - an impressive 46,000 - beating even Ford into second place. It temporarily gave Hyundai close to 5% share of the UK market. However, since the end of the scheme, Hyundai has struggled to maintain the momentum of sales and its UK share has fallen to pre-scrappage levels of just over 3%.
Under new global head of marketing Won-hong Cho, the car manufacturer is to unveil a 'modern premium' brand positioning with an imminent ad push, but it remains questionable whether British drivers will respond positively.
Is Hyundai forever destined to be a second-class citizen compared with its Japanese rivals, or can Korean cars become genuinely desirable to UK consumers? We asked Mike Welsh, chief executive of Publicis Dialog, which works on Renault, and Kitcatt Nohr Digitas senior planner Phil Cragg, who works on the Lexus and Toyota accounts.
- Mike Welsh chief executive, Publicis Dialog
The Korean car marques did well during the recession. They had always been affordable, and the scrappage scheme made them even more so. However, I'm not really surprised that Hyundai's sales have fallen back in the UK.
Scrappage is no more and the government introduced a VAT hike at the start of the year. That said, we're only just over two months into 2011 and we will have a much better idea of how Hyundai's year is going once we have seen March's new-registration data.
It is interesting to look at how Skoda has performed so far in 2011. The marque is up more than 7% year on year, and I think that has vindicated the marque's decision to grow its business by investing in the brand - not just through Fallon's ads, but at every touchpoint in the sales process. The work is very creative, very consistent and very effective.
If Hyundai decides to go down the same track - which it appears to be doing under new marketing chief Won-hong Cho, who is promising delivery of a new 'modern premium' positioning - then the brand has to accept that it is in it for the long term.
It has taken Skoda years to get where it is now, and it has the might of the VW empire to support it. Who's having the last laugh now, eh?
Remedy
- Think long term. It takes years, and a lot of cash, to change perceptions of your marque.
- Be single-minded. Find a focal point for your brand and stick to it.
- Create emotion in your communications so that the work becomes contagious and changes the conversations people have about the Hyundai brand.
Phil Cragg senior planner, Kitcatt Nohr Digitas
Scrappage came at the right time for Hyundai, coinciding as it did with several model launches - all small, economical cars favoured by scrappage customers. The brand embraced the scheme, offering savings of as much as £1500 on top of the £2000 incentive.
A year on from the end of scrappage, and yes, sales are down more than most other marques year on year, but they're down from such a spectacular height that Hyundai may not be too worried. This time last year, market share was an incredible 4.8%; it now stands at 3.1%. However, that's still almost double where it was (1.7%) for the same period in 2009, pre-scrappage.
Of more concern may be the kind of customer that scrappage attracted - more than half had never bought a new car before, and presumably won't again until Scrappage 2.0. Also, being cost-conscious consumers, they are more likely to get their car serviced at their local 'Fred in a Shed' garage than contemplate Hyundai dealership prices.
Remedy
- Move the brand on from its value proposition (the website currently features two value promotions 'Trade & Upgrade' and 'Pay no VAT'), possibly toward an added-value one (you get loads more spec for your money compared with most competitors).
- Find ways, such as customer events, to maximise advocacy from scrappage customers - they may not buy another new car for a while, but they can still influence their new-car-buying friends.
- Maximise the value of scrappage customers by getting them into dealerships for aftersales and servicing with bespoke service offers, and emphasise the long-term benefits of network servicing.