DETROIT — As if Detroit didn’t have enough worries.þþIn addition to the recession, and the bankruptcies of Chrysler and General Motors, a new threat has appeared in the rearview mirror.þþMany smaller automakers are gaining a bigger share of the market, most notably Hyundai and Kia.þþTogether, the two Korean brands, which are both owned by Hyundai, hold 7.3 percent of the American market, the same as Nissan, which ranks sixth in American sales, behind G.M., Toyota, Ford, Honda and Chrysler. Last year, Hyundai and Kia had 5 percent of the market.þþTheir gains appear to be a replay of what occurred four decades ago, when upstart automakers from Japan started selling cars in the United States. At the time, American carmakers dismissed them, but today they control nearly 40 percent of the American car market.þþAnalysts see two main reasons that smaller companies are capitalizing on the auto industry’s downturn. One is that the shrinking of the overall market — the current selling rate is about 10 million vehicles a year, down 40 percent from two years ago — has created opportunities for carmakers that do not need to sell millions of cars to make money. þþ“You can be profitable at a much smaller market size, selling to much fewer numbers of people,” said Ron Pinelli, president of Autodata, which tracks industry statistics. þþSecond, he said, buyers have become much less focused on brands and more on the quality of the vehicles themselves.þþ“There are so many good cars out there to choose from. Everybody’s building a good car right now,” Mr. Pinelli said. “The average person who punches out of work and picks up some fast food and goes home to watch reality TV is oblivious to which auto brands are owned by which corporation.”þþHyundai, in particular, has struck a nerve with its Hyundai Assurance plan, which allows buyers who finance their vehicles to return them if they lose their jobs. Other auto companies have adopted variations on the plan. þþHyundai has also received an image boost from its luxury Genesis model, which was named the North American car of the year at the 2009 Detroit Auto Show.þþ“The smaller automakers are having pretty good success in the last few years in creating loyalty, coming out with competitive products and benefiting from the misery of the bigger automakers,” said Jesse Toprak, a senior analyst at Edmunds.com, a Web site that offers car-buying advice.þþHyundai and Kia are outspending their Japanese and American competitors on incentives, which have averaged about $3,200 a vehicle this year, compared with $2,000 last year, Mr. Toprak said.þþ“They’re seeing this as the perfect opportunity” to pick up market share in the United States, he added.þþThe German automakers Volkswagen, BMW and Mercedes-Benz have also gained market share this year, in part because their sales declines are smaller than that of the overall market, which is down 36.6 percent.þþCollectively, Korean and European auto companies hold 15.7 percent of the American car market this year, up more than three percentage points from a year ago.þþTheir combined market share makes them bigger than Ford and close behind Toyota, the country’s second-largest seller.þþHyundai’s growth has come from winning over customers like Lee Figliuolo, a retired information technology executive in Palm Coast, Fla., who traded his Toyota Solara last month for a Genesis. þþHe has owned four Cadillacs but passed on buying a Cadillac CTS, in part because he was concerned, at the time, about General Motors’ looming bankruptcy filing. þþ(Now that G.M. has filed, the federal government is backing its warranties until it emerges from Chapter 11 bankruptcy protection.)þþ“A couple of years ago, I wouldn’t have bought a Hyundai,” Mr. Figliuolo said. But he was impressed by a friend’s Hyundai Veracruz, a crossover vehicle, and decided to check out the Genesis.þþ“I drove it and absolutely loved it,” he said. “I’m a stickler for fit and finish, and this was the best I had ever driven.”þþVolkswagen’s market share has climbed to 2 percent, from 1.5 percent a year ago, because of aggressive marketing for cars like the Jetta, whose sales rose 8.3 percent in May.þþAndrew Harrison of San Diego chose the Jetta after complaining to a Honda dealer that the Civic he test-drove did not have enough power. The dealer suggested he look at the Volkswagen. þþ“It was not on my radar at all,” Mr. Harrison said. “The Jetta I remembered was a bubbly thing that I would have never purchased.”þþNick Bunkley contributed reporting.þþ
Source: NY Times
