Hyundai looking to get into the heavy truck fray?

Jason Cannon

February 17, 2015

Truck sales in 2014 outpaced most expectations, and 2015 is shaping up to be another banner year.

Hyundai Xcient_main2
Hyundai Xcient truck

With commercial sales opportunities on the rise, it makes sense that more people are wanting to get into the dance.

In the short 40-plus days of 2015, Penske has acquired a handful of Freightliner locations, and dealerships aren’t the only ones getting into the act.

Reuters reported Tuesday that South Korea’s Hyundai Motor Co. is investing $1.8 billion over the next five years in a commercial vehicle effort. That investment includes entering the U.S. marketplace – Hyundai’s second-biggest overseas market behind China.

In a statement released Monday, Hyundai says it plans to introduce “premium models in North America and Europe.” What those models are, what they may look like or when that may take place is anyone’s guess.

The company’s standard for “premium” is also up to interpretation. More on that later.

A company short on long-term planning, Hyundai has been under fire for being somewhat of a rudderless ship. The company’s plans to jump into the North American market somewhat reflect that. Their announcement is full of intent with few hints of execution.

Such a venture wouldn’t be profitable for a very long time, and there are questions as to whether the Korean automaker could withstand the kind of financial battering it would endure while boosting truck, van and bus production.

And keep in mind that 2020 is only five years away. That’s not a lot of time considering the sheer volume of research and development that has to go into these trucks to enter markets with varying degrees of regulations.

The commercial vehicle segment is expected to grow by 30 percent in the next five years, and Hyundai bears watching as it tries to grab a slice of the pie.

When it was launched in 2013, Hyundai billed its Xcient as a truck the company thought could become an “important global player on the market for heavy trucks.” I doubt anyone at that time really thought “global” meant anything beyond the continent of Asia.

Let’s go back to that word “premium,” again.

This move makes a little more sense if Hyundai’s truck (or van) entry is value-priced; if it had a significantly lower purchase price than its U.S.-made counterparts and was aimed at high-mileage fleets that turn and burn through units.

I think a reliable, low-tech “disposable” truck or van would sell well, but Hyundai’s current heavy-duty entry is anything but low-tech.

The current version of the Xcient features a cabin height of 75 inches and a width of 31 inches. Driver comforts like a heated and ventilated driver’s seat, telematics and push-button start are common.

It’s also important to realize, the U.S. market has been unkind to Hyundai’s commercial efforts before.

A partnership with a company named Bering went south internally real quick from top to bottom and, eventually, Hyundai pulled out. By the turn of the millennium, Hyundai was in full retreat from the U.S. heavy truck market.

The lower-hanging fruit is Hyundai’s commercial van, but that segment isn’t exactly thirsting for a new entrant either. Sprinter is in the throws of launching the segment’s first four-wheel drive commercial van and in just seven months, Ford’s Transit has become the best selling commercial van in the U.S.

Nissan, Ram and GM all have commercial vans jockeying for the share that is left.

There’s also the consideration that Volkswagen is very much interested in becoming a major player in the global commercial truck market, and is even considering spinning its truck division off as a separate entity. Such a maneuver would be handy in the event the truck division wants to raise a pile of cash, possibly for a global push of its commercial trucks.

It should be an interesting five years to say the least.

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