Hyundai brings back the four figure car
Hyundai Motor Co. has opened a new chapter in Canada’s car wars, dropping the starting price of its Accent small car to $9,995 nationwide. It’s the same price it sold the car for 13 years ago and the first time in recent memory any manufacturer has offered a new automobile in the country for four figures.
The development is notable because it shows the extent to which competition among small cars sellers has intensified in recent months. Kia Motors is offering a cash incentive on its Rio car that brings its price under $10,000 as well. Some consumers find the vehicles so cheap they aren’t even bothering to test drive them before they buy.
But it also highlights just how much Canadian car prices in general have escaped inflationary pressure. If it had followed the same 29% cost increase since 1995 that other goods in Statistics Canada’s consumer price index had, the Accent would retail for $12,890 today. Pricing the car under $10,000 gives Hyundai an advantage in appealing to budget-conscious buyers who might have considered purchasing a used vehicle, said Vic Singh, chief economist at the Canadian Auto Dealers Association.
“Hyundai and Kia are under a lot of pressure at the moment from new entrants in the subcompact segment,” said Richard Cooper, executive director of J.D. Power & Associates in Canada, adding the carmakers are likely trying to “rattle people’s cages” amid a possible sales slowdown. “That psychological [four digit] barrier is quite important for consumers, particularly younger consumers and those are probably the people they have in their sights right now.”
Hyundai said there is no end date for its cash purchase promotion, which began in Quebec and has been expanded. Hyundai’s car factory in Ulsan, Korea, has upped output to meet Canadian demand, said John Vernile, vice-president of sales and marketing for Hyundai Auto Canada Corp.
Mr. Vernile said Hyundai’s thinking in dropping prices was to build more awareness of the carmaker, which has been operating in Canada for 25 years. Hyundai dealers agreed to accept a lower profit margin on the vehicles, he said.
A change in the way car buyers are shopping amid a higher Canadian dollar was also a factor. Instead of calculating monthly payments and finance rates, many buyers have switched their focus to list prices, comparing them to what is available in the United States, Mr. Vernile said.
“We thought that ‘you know what? If consumers are out there shopping on price, let’s give them a price that will be very very motivating to them,’” Mr. Vernile said. “We just knew that, my goodness, if you can offer a car under ten grand in this day and age, that we would have a home-run success.”
Canada’s subcompact car segment, which includes autos such as the Toyota Yaris, Nissan Versa, Honda Fit and Chevrolet Aveo, surged past 120,000 units last year for the first time, an increase of 17% from the year before. Of the top-five sellers, the Accent was the only car to post lower year-over-year volumes, dropping 7.8%, according to DesRosiers Automotive Consultants.
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