Monday, March 20, 2006

A sea change for Hyundai flagship: Hyundai Azera

A sea change for Hyundai flagship March 20, 2006 BY DAN JEDLICKA AUTO WRITER The redesigned, sleeker 2006 Hyundai Azera replaces the XG350 as the automaker's flagship sedan and is out to get such cars as the Toyota Camry and Ford Five Hundred. Maybe yes -- maybe no. Despite Hyundai's major quality improvements to its cars, the Azera doesn't have the rock-solid feel of the Camry or Five Hundred. However, the South Korean automaker says the generally refined Azera costs less than rivals when comparably equipped. The front-drive Azera's interior is quiet, except for noticeable tire noise on coarse surfaces that detracts a little from the car's "premium sedan" billing. Hyundai also wants the Azera to draw owners of its lower-line models -- and even those who drive an XG350. That car was decent but not very special. The new Hyundai is slightly longer, wider and roomier than the XG350. HYUNDAI AZERA PRICES: $24,335-$26,835 LIKES: Fast. Nice ride. Roomy. Stylish. Decent handling. DISLIKES: Tire noise on some roads. Occasional bouncy ride. Touchy brake pedal. The Azera also is far more powerful, with a 3.8-liter, 263-horsepower V-6 replacing a 3.5-liter V-6 with 194 horsepower and much less torque. The engine works with a responsive five-speed automatic transmission and offers slightly better fuel economy than the less powerful V-6. The quiet, smooth 3.8 V-6 has a wimpy exhaust sound but the main thing is that it provides solid acceleration in town and during 65-80 mph passing maneuvers. The Azera delivers an estimated 18 mpg in the city and 27 on the highway, compared with 18 and 26 for the old V-6. Azera economy figures are about right for a fairly big, roomy gasoline-engine sedan that weighs 3,629 pounds. The Azera is no sports sedan, despite sleek lines and nifty dual exhaust outlets. But it steers and handles well and the ride is smooth, although occasionally bouncy. Stopping distances are short, but the rather touchy brake pedal needs a more linear action. The Azera comes as the standard $24,335 SE and $26,835 higher-line Limited, which has such features as sumptuous leather upholstery. As always, Hyundai seeks to attract buyers with lots of standard comfort, convenience and safety equipment -- and an unusually long warranty. Some car buyers might not feel that the five-year/60,000-mile bumper-to-bumper warranty is all that impressive. But most are blown away by Hyundai's 10-year/100,000-mile powertrain (engine and transmission) warranty -- although few people keep a car that long. The Azera recalls the French word "azure," the color of blue skies and a color that reflects Hyundai's optimistic hopes. While American automakers had sales woes last year, U.S. sales of South Korea's Hyundai jumped to 455,012 vehicles from 418,615 in 2004. Sales through February rose to 64,227 units from 59,949 in the same year-ago period, and the Azera was too new to be included in the 2006 total. Standard for the SE are air conditioning with dual-climate controls, tilt/telescopic/leather-wrapped wheel with radio and climate controls, cruise control, power driver seat, AM/FM/CD/MP3 player, split-folding rear seat, heated and decent-sized power mirrors and power windows and door locks with remote keyless entry. Besides leather upholstery, the Limited adds heated front seats, power front passenger seat, woodgrain/leather-wrapped wheel, power rear sunshade and wider tires on larger 17-inch (vs. 16-inch) wheels. Both versions are loaded with safety items. There are no less than eight air bags, including front and rear side-impact air bags and side-curtain air bags for both seating rows. Also standard are electronic stability control and traction control systems and anti-lock brakes with electronic brake distribution for surer panic stops. Optional for both Azera versions is a sunroof, and the Limited can be had with optional power-adjustable pedals and integrated memory system for the driver's seat, outside mirrors, steering column and pedals. That option lets two drivers in a family quickly get their most comfortable driving positions. The Azera is exceptionally roomy, especially in the rear-seat area, and front seats are moderately supportive during spirited driving. The interior allows comfortable room for four tall adults -- or for five if a third rear passenger is slender. Outside doors open wide and have large handles for quick entry. Inside door handles are moderately sized, but all doors have thick, handy interior grab bars that allow them to be easily yanked shut -- an unusual, helpful feature. The Azera has a large windshield and an airy interior without the cheap, gray look of past South Korean sedans. There's good all-around visibility, and Lexus-style backlit gauges can be read quickly under various lighting conditions. Controls and cupholders are conveniently placed. Some people still do smoke, and the Azera provides a front ashtray and cigarette lighter. Climate and audio controls are small, but designed to be used with a minimum of fuss. The dashboard and console contain decent storage areas. And doors have storage pockets, with the front ones having a snap-open feature usually found in costlier cars. The large, fold-down rear center armrest contains cupholders and doesn't seem like an afterthought. The roomy trunk has a wide opening for quick unloading during rushed drop-offs at airports, and its inner lid's pull-down handle prevents hands from getting dirty on the outside lid. Seatbacks flip forward and sit flat to increase cargo capacity via a fairly large pass-through opening. The hood raises smoothly on a hydraulic strut to reveal easily reached fluid filler areas in the engine compartment. No doubt the Azera will outdo its predecessor because it's a better car, with above-average value. Source:

Thursday, March 02, 2006

The Road Narrows For Hyundai

The Road Narrows For Hyundai
With the rising won and runaway costs choking margins, it has to regroup fast Hyundai Motor Co. hardly seems like a manufacturer in distress. At a time when Detroit is barely hanging on, the Korean auto manufacturer's global sales last year climbed 10.8%, to 2.5 million vehicles. In the U.S. they were up 8.7% after surveys showed that new Hyundais match the best Japanese brands in quality. So why has Hyundai Chairman Chung Mong Koo suddenly put his company into "emergency" mode, saying Hyundai's very survival is at stake? The reason: a profit squeeze. Even as Hyundai's sales have soared, operating margins narrowed to 4.1% in the latest quarter, down from 9.9% in the second quarter of 2004. For 2005, profits fell by nearly a third, to $1.43 billion. Hyundai executives blame a strengthening currency as Seoul has stopped intervening to hold the won down. The won now stands at around 970 to the U.S. dollar, 22% stronger than two years ago and nearly double what it was in 1998. "We've met all the targets in our control: production, sales, and market share," says Senior Vice-President Hwang Yoo No. "But the revaluation of the won has been too fast. "The won's strength comes at a bad time. U.S. carmakers are offering discounts of up to $4,000 on each of their cars, and the Japanese are enjoying a relatively weak yen. Hyundai, meanwhile, is spending like crazy. It raised its research and development budget to $1.75 billion in 2005, more than double 2002's level, and has committed some $3 billion over five years to help parts suppliers improve quality. And its material costs have jumped 20% in the past two years, according to Saxmsung Securities Co. "The real test for Hyundai management is just beginning," says Samsung Securities analyst Kim Hag Ju, who sees a margin of just 3.1% for the quarter ending in March. "How Hyundai will control costs in the high-won era will make it go either the Toyota way or the Mitsubishi way," says Hyundai's Hwang. BUFFING ITS IMAGE Mitsubishi Motors, of course, almost collapsed. So Hyundai is taking a page from Toyota Motor Corp., which has dodged high costs at home by manufacturing overseas. Of the 2.9 million cars Hyundai aims to sell globally this year, about a third will be built abroad, including 270,000 Sonata sedans and Santa Fe SUVs due to roll out of an Alabama factory Hyundai opened last May. It's boosting output in India and China, and also may open a factory in the Czech Republic. Hyundai's strategic challenge involves more than ducking the effects of the won. "Hyundai has extremely aggressive sales targets," says J.D. Power & Associates President Stephen Goodall. "The targets are realistic if their quality improvements can hold up." But quality isn't cheap, and Hyundai still can't charge the same premium as Toyota. Today the Sonata costs about 10% less than Toyota's Camry, though that difference has shrunk from 15% four years ago. The only way to close the gap is to spend even more buffing its image and improving its lineup. In the U.S., a revamped Sonata and Santa Fe, as well as a new $25,000-plus sedan called the Azera, are supposed to give the brand a boost. Hyundai might also create a new nameplate for its first true luxury model, a rear-wheel-drive sedan codenamed BH that's expected to make its U.S. debut in 2008. The carmaker is attacking costs, too. In February it began renegotiating contracts with hundreds of parts suppliers in hopes of cutting prices by an average of 10%. On Feb. 22 its 8,100 managers accepted a wage freeze. Hyundai wants its powerful unions also to accept a freeze and greater work-rule flexibility. The union dismissed the demands as "ridiculous." Hyundai, a distressed company? Not exactly. But with the won on the rise, the carmaker realizes it needs to act now. Source: BusinessWeek