Beijing Hyundai: Let the price cut enhance the modern awareness of Beijing

In the traditional perception, Korean cars were considered to be behind American, European, and Japanese brands, often ranked third in the global automotive industry. However, after 1998, Hyundai Motor Company launched an aggressive strategy to position itself among the top five automakers worldwide. To achieve this goal, Hyundai recognized the importance of the Chinese market. Beijing Hyundai, as a late entrant into the Chinese auto sector, faced challenges in brand recognition. In response, the company initiated a bold move: price reductions. Just one year after its establishment, Beijing Hyundai started slashing prices with the aim of raising awareness of modernization among Chinese consumers and catching up with leading brands. In mid-March, the price cuts on the new 2004 Sonata generated significant media and consumer attention. According to Li Xiaohao, Deputy General Manager of Beijing Hyundai, the deeper reason behind the price cuts was the reduction in manufacturing costs and the implementation of a more efficient management model. After the initial phase of simple assembly, Beijing Hyundai became one of the fastest-growing joint-venture brands. With original monthly production capacity at 78,000 units, demand quickly outpaced supply, prompting the company to adjust its production lines. This adjustment improved product availability and reduced costs, which would eventually enhance the brand’s marketing performance. According to a survey by a leading market research firm, Beijing Hyundai’s Sonata had captured 10% of its segment, while the Elantra 1.8 was close to that figure, showing strong growth momentum. This year, Beijing Hyundai aims to sell 130,000 units, with 70,000 from the Sonata alone. While price cuts helped initially, building brand value is now the key. The company admits that Sonata’s brand recognition in China remains low, and some consumers still have concerns about the quality of Korean vehicles. However, Beijing Hyundai claims that it has sold over a million units nationwide without any reported quality issues. The first generation of Sonata, launched 17 years ago, achieved great success globally, and the company is confident in its quality. Li Xiaohao emphasized that competition today is not just about price but about overall strength, including brand influence. He pointed out that when people buy BMW or Mercedes-Benz, they often value the brand as much as the product itself. Beijing Hyundai aims to strengthen its overall competitiveness beyond just lowering prices. To build confidence in the Chinese market, Hyundai highlighted its production capabilities. During a visit to China, Chairman Zheng Mengjiu introduced the Ulsan factory as the most advanced and productive single-model plant. He also announced that the Beijing factory would become the second-largest in the modern era, with the highest level of modernization in China. Zheng predicted that by 2006, Beijing Hyundai’s production and sales would reach 200,000 units, and by 2010, it would soar to 550,000 units. Hyundai also promoted its brand through real-world testing. For example, the use of Sonatas as taxis demonstrated their reliability. Last year, 600 LPG Sonatas were deployed as taxis, and no quality issues were reported. Customer service is also a crucial part of the brand strategy. Beijing Hyundai invested heavily in upgrading its 4S stores, with over 100 outlets currently across the country and a target of reaching 180 by the end of the year. Li Xiaohao even personally visited a Honda dealership in Beijing to analyze the competition. With determination, he expressed hope that, as the scale grows, Hyundai could stand shoulder to shoulder with Japanese brands. **Q: How do you see the relationship between brand promotion and product promotion? Which is more important?** **Li Xiaohao:** Brand image and product promotion are different aspects. We haven’t studied much about the strategies of competitors, but as a latecomer in the Chinese market, we believe that gradually building our brand image through product promotions over the next two to three years will help us establish a stronger presence.

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