Hyundai rebranding Apple's 'premium' image: AUTOSHOW

South Korea's Hyundai Motor unveiled a new brand slogan at the Detroit auto show on Monday, seeking to transform its image as a maker of value-for-money vehicles into one that evokes "new premium" at affordable prices.

Under the slogan "New Thinking. New Possibilities," Hyundai said it would aspire to emulate premium products such as Apple's iPhone and the Nespresso coffee-making machine, while maintaining the affordability that has helped it become the world's fifth-biggest automaker with affiliate Kia Motors.

The move comes as Hyundai faces slowing volume expansion this year due to capacity constraints, and a growing threat from cheaper Chinese cars at one end and European luxury brands on the other which are tapping into the mass market.

"We are targeting somewhere between the mass market and luxury segments," said Cho Wong-hong, executive vice president and head of Hyundai's marketing division. "It is a market that has not been tapped by other car makers before," he told reporters in Seoul last week.

Cho's comments were embargoed until Monday, when Hyundai unveiled its new branding direction, embodied in the upcoming Veloster utility coupe, at the Detroit auto show. The Veloster, which comes with a unique three-door design, marks Hyundai's first push into what it calls "the new premium segment."

Hyundai has captured attention in the global auto industry with its rapid expansion fueled by high-quality products boasting value-added features at competitive prices, such as the Sonata, Genesis and Elantra models.

But management is keen to improve its relatively low brand value, which consultancy Interbrand ranked at No. 8 in the global auto industry last year.

"We do not want to be the biggest carmaker. We want to become the most loved car brand," said Lee Kwang-guk, director of Hyundai's Brand Strategy Team. He said Hyundai had no immediate plans to launch a separate premium brand like Toyota Motor Corp's Lexus, although he added the company was studying all options.

Hyundai said it aimed to step up efforts to offer cars with high-end features and design at reasonable prices, while renovating its dealerships worldwide.

Hyundai noted that it had surpassed Toyota in JD Power's Initial Quality Study, a key quality measure in the United States, in 2004, even before the Japanese automaker's recall crisis last year, but that its brand value was estimated at only one-fifth of Toyota's, which ranked at the top in Interbrand's list with a value of $26 billion.

If successful, the premium brand strategy could help boost Hyundai's pricing power in the long run and partly offset the impact of slowing volume growth, analysts said, while adding that heavy marketing spending would weigh on profit.

The move could also turn Hyundai into an even more formidable rival for automakers, many of which are already nervous about the South Korean brand's rapid climb.

"It is the right way to go for Hyundai, as its volume expansion would soon reach a limit," said Kang Sang-min, an analyst at Hanhwa Securities.

He expected Hyundai's volume growth to nearly halve to 7.1% in 2011, from last year's 15.9%.

In 2010, Hyundai Motor sold 3.6 mn cars, while Kia boosted sales by 40% to 2.1 mn vehicles. Hyundai and Kia said they would target sales of 6.33 mn cars in 2011, up 10% from a combined 5.75 mn units sold in 2010.

"With the success of penetrating the premium segment (with the Genesis and Equus) and steady improvement in its brand value, we expect sales of lower-segment models, like the new Elantra and Accent, to be boosted (in the United States)," Macquarie wrote in a report.

The brokerage estimated Hyundai's U.S. market share to further rise by 0.4 percentage point to 5.0% this year.