Hyundai Plans to Up-Shift With a Bigger Sedan

Hyundai Motor America, enjoying its best sales in a decade, plans to bring a near-luxury sedan to the U.S. by the end of next year, company President Finbarr O’Neill has confirmed.

The long-discussed move would give the Fountain Valley-based importer an important “move-up” vehicle beyond its current lineup of small and mid-size cars while helping its parent, Seoul-based Hyundai Motor Corp., regain sales volume that it has lost because of South Korea’s economic woes.

The five-passenger car, code-named the XG, would be built on the same platform Hyundai uses in South Korea for its Grandeur sedan and be about the same size as Toyota Motor Corp.’s Avalon. It is likely to be powered by the 3.0-liter, 200-horsepower V-6 engine now used in South Korea.

Although there is no clearly demonstrated clamor for a bigger Hyundai--analysts say the XG would be competing in an especially competitive market segment--it could help attract price-conscious customers who seek more car than the company offers with its present lineup.

With pricing expected to start at about $23,000 with leather seat covers, air conditioning and an automatic transmission as standard equipment, the XG would be among the least expensive in its class.

Despite unsettled economic conditions at home, Hyundai appears to be staging something of a comeback in the U.S. this year after nearly a decade of lackluster sales resulting from a ruinous reputation for poor quality.

The company reinvented the economy car market in the U.S. with its $4,995 subcompact Excel in 1986, which went on to set import sales records in 1987 and ’88. But South Korean executives failed to listen to warnings from their American unit’s managers that U.S. consumers demanded a high level of quality and reliability even from entry-level vehicles.

In a rush to meet demand for the inexpensive cars, Hyundai sent underpowered vehicles to the U.S. Sales plummeted when problems began developing as the cars started wearing out prematurely.

In recent years, however, Hyundai has improved the engineering and design of its vehicles as well as quality control at its factories in South Korea.

To promote its new commitment to reliability, Hyundai began offering an unprecedented 10-year, all-encompassing warranty in 1998. Through Sept. 30, Hyundai had sold 106,736 vehicles in the U.S., a gain of 68% in a market that has seen total sales jump by about 10%.