Why Are Hyundais So Cheap? What You Need To Know

Hyundai is a South Korean automaker that has been producing cars since the 1960s.

Hyundai is known for offering affordable, and well-equipped vehicles that appeal to a wide range of customers.

Grande prairie image
Grande Prairie [PHOTO COURTESY OF GRANDE PRAIRIE HYUNDAI]
But how does Hyundai manage to keep its prices so low compared to other brands?Here are some possible factors that contribute to Hyundai’s low-cost strategy.

Economies of Scale

Hyundai is one of the largest car manufacturers , with a global production capacity of over 5 million vehicles per year.

Hyundai can benefit from economies of scale, which is the advantage that arises from producing large quantities of a product.

An image of Hyundai Elantra
A Hyundai Elantra?[PHOTO COURTESY OF VEHQ]
By mass-producing cars, Hyundai can reduce the average cost per unit and spread the fixed costs over more units.Hyundai can also negotiate better deals with its suppliers and distributors, and leverage its global presence.

Vertical Integration

Hyundai is also a vertically integrated company, which means that it controls most of the stages of its production process, from design and engineering to manufacturing and distribution.

Image of Crowfoot Hyundai
Crowfoot Hyundai [PHOTO COURTESY OF CROWFOOT HYUNDAI]
It owns its own steel plants, engine factories, transmission plants, and assembly lines.This allows Hyundai to reduce its dependence on external suppliers, lower its production costs, and ensure consistent quality and performance across its products.Hyundai can also respond faster to market changes and customer preferences by having more control over its operations.

Innovation and Technology

Hyundai is not only a low-cost producer, but also a leader in innovation and technology.

It invests heavily in research and development, spending about 6% of its revenue on R&D in 2020.

Hyundai has also been at the forefront of developing new technologies, such as hybrid and electric vehicles, hydrogen fuel cells, smart mobility solutions, and autonomous driving systems.

By investing in innovation and technology, Hyundai can improve its efficiency, productivity, and competitiveness, as well as offer more value-added features and services to its customers.

Customer Satisfaction

Hyundai is also committed to providing high-quality products and services that meet or exceed customer expectations.

It offers one of the best warranties in the industry, with a 10-year/100,000-mile powertrain warranty and a 5-year/60,000-mile bumper-to-bumper warranty.

Hyundai also ranks high in customer satisfaction surveys, such as the J.D. Power Initial Quality Study and the Consumer Reports Reliability Ratings.

By ensuring customer satisfaction, Hyundai can build customer loyalty, increase repeat purchases, and generate positive word-of-mouth.

Hyundai cars are generally considered to be good quality, as they offer reliable performance, attractive design.

Hyundai has been improving its quality over the years, and has received many awards from various sources.

For example:

Car of the Year Awards, which are based on rigorous testing and expert reviews of hundreds of new cars.

The winners were the Ioniq 5 (Best Large Electric Car), the Tucson (Best Family SUV), the i10 (Best City Car), and the i20 (Best Small Car)

Conclusion

Hyundai is able to offer cheap cars without compromising on quality or performance by leveraging its economies of scale, vertical integration, innovation and technology, and customer satisfaction

Its low-cost strategy has enabled it to gain a significant market share in the global automotive industry and become one of the most respected and trusted brands in the world.

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