Will Hyundai terminate Sonata series?

Sister Kia’s new sedan K-5 eating away its market share


Will Hyundai-Kia Automotive Group kill its "steady best-seller," the Sonata?

Hyundai officials say "absolutely not," but there appear to be signs that such an eventuality may be on the cards.

The biggest threat to Hyundai's best-selling vehicle is not from outside but from its sister firm, Kia.

Orders for Kia's K-5 sedan, which will be marketed soon, are so overwhelming as to take away from orders for the YF Sonata, a handsome-looking sedan with what Hyundai calls the product of "fluidic design."

According to the data given by the group, Thursday, 11,138 Sonata were sold locally in April, a decrease of 23.6 percent from a month ago.

The local sales of all Hyundai cars fell by 14.4 percent last month from the previous month. The plunge in Sonata sales was rare.

"Hyundai has previously been enjoying buoyant sales of the model during the first quarter. But situation has changed," a high-ranking industry executive said.

Hyundai officials say that the drop in Sonata sales will be transient so there is no need to determine whether to put an end to the Sonata series.

"It is different from Volkswagen's Beetle, which took decades to see a follow-up model," a Hyundai official said. "Cars in the Sonata series are often totally different cars from each other."

Still, the numbers don't look good, although any termination of the Sonata series would prove to be a hard pill to swallow, considering its flagship position in the Hyundai lineup.

For the first three months of this year, the combined sales of the Sonata were 40,720 and the sales curve was impressive ― 14,575 for March, 12,217 in February and 13,928 in January.

It remains debatable over what the decisive factors for the sudden drop are. But analysts and watchers cite higher appetites for the K5 by consumers as one possible reason.

Officials at Kia Motors said it has so far sealed a total of 9,000 contracts, including 6,000 pre-orders from March 5, which they claim is "impressive."

"We are receiving more calls about the K5. It is yet to be seen whether the popularity of the model will continue for the remainder of this year," an official at Kia said.

The new model has a low, wide stance, while a long wheelbase. Short overhangs will serve to set it apart from its global segment competitors, Kia believes.

Developed under the TF codename, the K5 uses the same front-wheel drive Type-N platform as the recently launched Hyundai Sonata and Kia K7 sedans.

Launch engines consist of Hyundai-Kia’s existing 1.8 and 2.4-litre gasoline I4s, while the existing model’s 2.0-litre diesel will be replaced by the more modern 2.2-litre R-engine. A gasoline-electric hybrid powertrain is due to be added in Korea, Canada and the United States in 2011.

"It is forecast Kia will undertake aggressive promotions in terms of pricing. The demand for Sonatas will continue. Who knows if top Kia officials want cannibalization to fuel the ongoing momentum for its external growth," Song Chang-hoon, an analyst at Kyobo Securities, said, adding the local brokerage still maintains its "overweight" position for Kia Motors.

By whatever measure of increasing sales ― higher in general or eating into Sonata sales ― K5 could crimp the Sonata’s margins, according to watchers.