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The Dude
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Hyundai Ad Spending Down, But Fills Holes from GM, Others

By Michael Volpe

Orange County Business Journal Staff

Genesis sedan: $100 million ad push
Fountain Valley-based Hyundai Motor America Inc. is looking to spend its way through a sales downturn that has left no automaker untouched.

The U.S. arm of South Korea’s Hyundai Motor Co. is in the middle of a $100 million marketing campaign for its Genesis sedan. Hyundai, known for economy cars, is looking to compete with luxury brands such as BMW, Lexus and Mercedes-Benz with the Genesis.

The company plans to expand the campaign with a Super Bowl ad and other marketing for a Genesis sports car due in February.

The push comes as automakers are cutting advertising spending amid one of the worst sales downturns in recent memory.

This month, U.S. auto sales are expected to fall 30% from a year earlier to 872,000 vehicles, according to Santa Monica-based Edmunds.com Inc.

The industry’s ongoing slide has played out in advertising. In the second quarter, automakers spent $3.3 billion on advertising, down 11% from a year earlier.

Hyundai hasn’t been immune. Its sales and advertising have fallen in line with industry declines.

In September, the company’s U.S. sales fell 25% from a year earlier to 24,765 vehicles.

The company also has been paring back advertising. In the second quarter, Hyundai spent $147.2 million, down 10% from a year earlier.

But Hyundai’s pullback isn’t as severe as other automakers.

The company has picked up commercial time abandoned by General Motors Corp. for the Super Bowl and Academy Awards in February, according to trade publication Advertising Age. Hyundai has taken two 30-second spots in the second half of the Super Bowl and all of GM’s Oscars spots.




Concept version of Genesis coupe: sports car debuts in February

“When times get tough, most auto companies put the brakes on their advertising,” said Michael Deitz, manager of product development for Hyundai in Fountain Valley. “We’re keeping our foot on the accelerator for our advertising.”

Hyundai sees the downturn as a chance to gain market share and get its name out.

“We really have to spend the bucks and get the message out there to get consumers to be aware of the Hyundai brand,” said Derek Joyce, Genesis coupe product manager.

Hyundai is at a critical point. The company, which started selling cars here in 1986, has nearly tripled its U.S. sales since 1999 with 467,009 vehicles sold in 2007.

Hyundai was the No. 7 seller of autos in the U.S. in September.

The company is looking to take a page from Toyota Motor Corp. in its evolution here. Once just a maker of cheap, fuel-efficient cars, Hyundai now wants to sell everything from econoboxes to sport utility vehicles and luxury sedans.

Changes

Hyundai’s U.S. headquarters—the largest auto operation in Orange County with 900 local workers—has seen changes among executives in the past two years as South Korean bosses have taken a larger role in the operation.

The automaker is in the process of handing over its advertising to Irvine-based World Marketing Group, a unit of Hyundai that has its headquarters in South Korea.

“They had already been doing the media buying and planning for us, but their role is just going to be expanded,” product manager Joyce said.

San Francisco’s Goodby, Silverstein & Partners, part of New York-based Omnicom Group Inc., has handled Hyundai’s advertising since early 2007. It is set to hand over the business to World Marketing in February.

The automaker is putting much of its marketing weight behind the Genesis.

The Genesis sedan debuted in July, a tough time for auto sales. It starts at $33,000. Most end up selling for about $42,000 after buyers add options.

Betting on Price, Mileage

Hyundai is betting on the sedan’s price—about that of an entry-level BMW or Lexus—and its fuel efficiency, even for V-8 models.

“We’re entering the market place at a good time and getting some conversion just from the fuel efficiently alone,” Deitz said.

The company has print ads running for the Genesis in industry and lifestyle magazines. They target older people looking for their first luxury car.

“We see this as the natural progression of where our brand has been moving,” Hyundai spokesman Miles Johnson said.

Since the July debut of Genesis, Hyundai has sold 2,855 of the sedans.

The forthcoming Genesis coupe is aimed at younger drivers. Hyundai plans to launch the sports car at auto shows early next year.

The automaker is looking to create some early buzz for the coupe at the Specialty Equipment Market Association tradeshow in Las Vegas this month.

For the show, Hyundai is showing Genesis sedans and coupes that have been customized by Rides magazine, a car buff publication that’s part of New York-based Harris Publications Inc., Huntington Beach-based Rhys Millen Racing and others.

The coupe is set to be in most dealerships around mid-February, about the time Hyundai plans its media push for the sports car.

Advertising for the coupe won’t be as extensive as with the sedan, Joyce said.

Other than the Super Bowl commercial, it’s set to be “a grassroots, underground marketing effort,” Joyce said.

That includes magazine stories, a Facebook page and postings on auto online forums.

“It will be less expensive to do and actually more effective with younger buyers,” Joyce said.

Part of Strategy

The coupe fits into Hyundai’s evolution strategy by showing it can make high performance cars too, according to Johnson.

The coupe is the first of seven autos set to debut in the next two years. Some are new models while others are updates of existing autos.

“Hyundai is working to get more people aware of the brand and actually consider us,” Joyce said.
 
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