Hyundai UK sees 2011 a "tough year"

With the UK's scrappage scheme now ended and an increase in VAT (sales tax) from 17.5% to 20% scheduled for January 2011, what is the future for scrappage sales leader Hyundai and the new car industry in general?
Managing director Tony Whitehorn said: “The scheme, introduced to incentivise new car sales during the recession, came just at the right time for the brand because we had just introduced new models such as the small i10, the i20 supermini, the i30 family hatch and the iX35 compact crossover SUV, ideal fuel efficient, cost effective scheme models.”
As a result, Hyundai was scheme market leader as about 400,000 new cars and light commercial vehicles were delivered.
Hyundai topped the scheme sales league with 45,700 sales compared with Ford’s 44,457. In third place was affiliate Kia with 33,444 customers.
Whitehorn added: “Our success with the scheme not only increased our sales by over 102% to 56,726 units, it raised our brand’s profile and product awareness. So far this year our UK sales are up again on the same period last year by 138% to 34,611 units and we should achieve 60,000 sales this year – slightly more than last year. Vehicles on the roads are the best form of advertising.”
He said: “Scrappage was also useful for us because people experienced our products for the first time. The brand in the UK had suffered enormous anonymity in the past but 90% of our scheme sales were to conquest customers.  We had one customer who bought an i10 and he introduced 16 other people to the brand.”
“After scrappage customers are still looking for affordable, stylish and reliable vehicles and affordability above all is going to be a key issue in the future because of the economic climate. This is more good news for us as we introducing nine new models in the next 17 months – a real ‘product-fest’.”
“Hyundai is very focussed on reducing CO2 levels and are working on supplying more petrol and diesel engines to meet the sub-120, -110 and -100g/km tax levels. I question whether there will be the infrastructure in the UK to support electric vehicles. Hybrids we can supply but the long-term answer is fuel cell technology. In the meantime, the realistic route is to make current petrol and diesel engines even more fuel efficient.”
“Although we remain a predominately a brand which appeals to retail customers, the fleet and business user-chooser sector is a biggest opportunity for us in the future and we already have the products to meet their requirements especially the new iX35 compact SUV which is creating a lot of interest. We are looking to supply smaller fleets – not major discounted fleet sales. We need to increased our the size of our current 148 strong dealer network and we are looking to add regional dealer groups to our network to bring that number up to 165 by 2011.”
He said, “The proposed VAT increase next January will be a major challenge for the market, everybody knows what is coming in January 2011 so the last quarter of this year, which wasn’t going to be good, will now be good as customers beat the VAT increase.  But 2011 will be a tough year”
“The industry cannot absorb the VAT increase, with the margins we are all working with it is just not possible.”

SRC-interview just auto.