Hyundai Adding Up To Four New Crossover SUVs In "Permanent Shift"

February 1, 2016

When FCA chairman Sergio Marchionne said last week that crossovers were the future--and killed the Chrysler 200 and Dodge Dart mid-size cars--he wasn't alone in seeing a utility-heavy future.

Hyundai Motor America president and CEO Dave Zuchowski also says his company's future lies in crossover SUVs--and agrees that it's a "permanent shift" that could bring up to four new vehicles to the Hyundai and Genesis brands over the next three years.

Speaking at the launch of the 2017 Hyundai Elantra sedan in San Diego, Zuchowski said his company is adjusting production of cars like the new Elantra, so that it can assemble more crossover SUVs for the utility-hungry U.S. market.

Up to four new crossover SUVs coming

Built in South Korea and in Alabama, the Elantra will soon share assembly space with the Santa Fe Sport, in a bit of a return to form.

When the automaker's first American assembly plant opened outside Montgomery, Ala., it assembled the Santa Fe SUV, later adding production of the Sonata and Elantra. Today, the Santa Fe Sport is built alongside Kia vehicles in West Point, Georgia. (The larger three-row Santa Fe is built in Korea.)

Adding Santa Fe Sport production back in Alabama will give the company capacity to build more crossovers--and possibly, the production version of the Santa Cruz truck concept.

But Hyundai's not stopping at adjusting production. In the next three years, it will add a raft of new sport-utility vehicles to a lineup that now counts the Santa Fe, the Santa Fe Sport, and the Tucson.

The Hyundai brand could get two new crossovers. One would be a subcompact offering slotted below today's Tucson, or roughly the size of a Jeep Renegade. That could allow Hyundai to grow the Tucson more solidly into the compact class, and to allow the Santa Fe grow in size accordingly as well--effectively migrating its successful SUV nameplates into bigger, more profitable segments.

An even smaller utility vehicle could be in the cards for other markets--"something like the Kia Soul"--though it's uncertain it would be sold in the U.S.

Finally for its nascent Genesis brand, Hyundai is promising a pair of SUVs--both based on a rear-drive architecture, sized like the BMW X3 and X5, with companion sedan models also to come.

A "generational shift" toward crossover SUVs

The move to weight Hyundai production toward utility vehicles mirrors "a generational shift that probably will accelerate rather than slow down," Zuchowski said.

"We don't think that's a temporary change," he said. "It's driven by lifestyle."

Buyers of mid-size cars, in Hyundai's view, are gravitating to compact crossovers in part because they want to own less. In that scenario, one vehicle has to do everything.

"What we see with millennials vehicle has to do more things...a crossover allows you more flexibility."

With a unibody crossover SUV, Zuchowski says, "you can have beautiful styling and [better] fuel economy."

He adds that it's not just structurally low gas prices driving the change--though those prices do play a role. 

Today, gas prices hover around $1.50 a gallon near Hyundai's production base in Alabama, but that should eventually change, he adds.

"Part of the growth in truck is $2 gas," he says. "In a couple of years, full-size trucks and body-on-frame SUVs will be affected by [gas] prices, but crossovers not as much."

Still, more crossover SUVs will likely have the net effect of lowering fleet fuel economy, just as EPA gas-mileage standards are ratcheted higher.

Hyundai's offset to that potential gas-mileage hit? A lineup of new hybrids and electric vehicles set to go on sale later this year. The new Hyundai Ioniq, a compact car to be sold in electric and hybrid form, is to be revealed at the next Geneva motor show in March. Hyundai partner Kia has a hybrid Niro SUV for display at this month's Chicago auto show.


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