Hyundai Tests Upscale Market With Sonata : South Korean Car Maker Hopes to Compete with Honda Accord, GM’s Sunbird and Skylark

Hyundai Motor Co., which became the leading supplier of low-priced cars in the United States just two years after its debut, is planning a move into more upscale markets.

Hyundai, South Korea’s largest car maker whose subcompact Excel is the best-selling import in the United States, last week started marketing domestically a new Sonata model aimed at competing directly with popular compact cars in the United States.

Kim Pan Gon, assistant director of the South Korean company, said in an interview that Hyundai would begin shipping the new model to North America in October from its plant at Ulsan, southeast of Seoul.

Assembly Plant in Canada

He said the Sonata, featuring an aerodynamic body and engines with capacities of 1.8 and 2 liters, compared to the Excel’s 1.5 liters, would compete with such cars as the Honda Accord and General Motors’ Sunbird and Skylark.

Hyundai officials say export prices for the Sonata have not been decided, but domestically the cars sell for more than double the cost of the Excel.

“For Sonata’s North American sales, we will be able to complete an assembly plant in Canada by the end of this year, although the 1989 production is expected to be about half the 100,000 capacity of the plant,” Kim said.

The $250-million plant in Bromont, Quebec, is in part intended to avert trade friction with the United States.

Hyundai is expected to benefit from the U.S.-Canadian free-trade pact, under which the Canadian-made Sonatas would be shipped to the United States duty-free, industry officials said.

Kim said Sonata would be the first of a string of Hyundai models to be introduced in the United States in the next two years. They included a subcompact model being developed to replace Excels.

The Hyundai executive said his company’s move to more profitable compact car markets was because it could no longer expect continuing success in the American market by depending solely on its price competitiveness.

“Our workers used to be highly disciplined and do whatever the company wanted them to do, but since the government announced democratic reforms in June last year, the workers’ attitude changed completely,” Kim said.

Hyundai’s production halted for nearly a month until June 24 because of a strike by workers demanding higher pay and better work conditions. The stoppage ended only after the management allowed a pay rise of 21% to 30%.

“Having a hard time in labor negotiations is expected to become an affair that will crop up once a year,” Kim said, “The labor problem coupled with a continuing appreciation of the local currency forced us to rely more and more on quality. We do a lot to improve productivity through factory automation.”

Hyundai Motors’ Kim said he was confident Sonata would prove successful in the highly competitive U.S. market.