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Hyundai To Push Premium Status

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Its quality woes appear to be behind it and its warranty program has proven to be a big hit with consumers. What does Hyundai do for an encore?

The answer: launch "the most new vehicles and the most in new segments in our [19-year U.S.] history," said Hyundai rep Chris Hosford—and back up the blitz with a 60 percent increase in ad spending to $350 million.

"We don't have to apologize for being Hyundai anymore," said Dale Hruby, principal at Hyundai shop Richards Group in Dallas.

Top priority for Richards is to move Hyundai from its prior positioning based on price to more of a premium brand and thus put distance between itself and sibling Kia. Just as Volkswagen can sell the same automotive platform for the Passat and luxury Audi TT, Hyundai's new Sonata can coexist with Kia's lower-priced Optima, said Hosford.

On the heels of this month's introduction of its Tucson sport utility, Hyundai will unveil six vehicles over the next 24 months. Among the most important debuts is the 2006 Sonata, the first U.S.-built Hyundai, arriving in May 2005. (Annual U.S. sales are projected to rise from just over 400,000 in 2003 to 430,000 this year and 500,000 in 2005, Hosford said.)

The Sonata represents a turnaround in quality that surprised even the rating experts. J.D. Power and Associates ranked the model No. 1 in initial quality among entry-level, midsize cars in April—from worst to first in just 10 years.

"A decade ago ... no one would have predicted [the Korean carmakers] could not only keep pace, but actually pass domestics and other imports in terms of initial quality," said Joe Ivers, an executive director at J.D. Power.