Hyundai Wants To Cause Another Major Disruption

Sales

And why that's a good thing.

Buying a brand new vehicle is out of the question for many car shoppers. Why? It’s very simple, actually. Let someone else pay the depreciation. Thousands of dollars can be saved this way and one can still buy a late used model, say one coming off a two or three-year lease, at an excellent price and still with a factory warranty. Makes sense, right? Of course. And Hyundai, like all automakers, is fully aware of this, hence one reason why its all-new Venue sub-compact crossover makes an awful lot of sense.

Speaking with Hyundai vice president for product and digital planning, Mike O’Brien, Automotive News has learned that the South Korean automaker is specifically targeting these used car shoppers with the Venue thanks to its low base price. But in order to achieve that low sticker price, one major component had to go: all-wheel-drive.

"When you make all-wheel-drive, you have to have larger axles and larger hubs and larger suspension components, and all those things cost money,” O'Brien said. "The easiest thing for product planners to do is to add. Nobody resists you. 'Oh, add it, add it, add it.' And then you have to pay for it, and then the product becomes difficult to afford,” he said. Hyundai could have very easily added AWD even as an option but, as O’Brien indicated, the price would go up.

Instead, the Venue will remain front-wheel-drive only which, on the one hand, will keep prices down, but will eliminate just about any chance for basic off-road conditions, such as heavy snow. The Venue will, therefore, be marketed as a stylish urban crossover. You know, for city dwellers, but Hyundai is confident about its decision to forgo AWD.

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O’Brien added that about a third of the 40 million used car transactions last year began with buyers shopping for a new vehicle but ultimately balked at the price. That’s the niche Hyundai believes it had identified. Hyundai has not yet announced official pricing for the Venue, but O’Brien indicated it’ll be priced below the Kona’s $21,000 base price but a little higher than the Accent, which starts at just under $16,000. The Accent will remain on sale as long as there is demand.

"The whole product concept of Venue was built around the idea that a customer could walk into one of our stores and have a choice, and a similar price point, of either an entry car or an entry CUV,” O’Brien said. "Remember, we're competing against used cars in many cases.”

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