Why Hyundai Should Buy Volvo
Why Hyundai should buy Volvo!
One could argue the finer points of safety in favor of each company, but both bring to market a superior product where the synergies could prove overwhelmingly impossible to overlook.
Hyundai has luxury products ready to roll, but no distribution system. Of course there are 750 plus Hyundai dealers in the US already, but few are prepared to accommodate high-end clientele. Plus keep in mind the US is only 1 market and Volvo has a worldwide distribution system where reputation and safety are its bellwether stalwarts and Volvo could absolutely flourish with an influx with the latest in Korean craftsmanship. And while an 8 billion dollar price tag is a lot to swallow, Hyundai could easily spend twice that developing a worldwide distribution system that may take decades to mirror the innovative safety image Volvo enjoys today. No doubt the Korean products deserve greater respect, but if it takes 10 to 15 years and billions of dollars to get what could be had right now with Volvo, you have to wonder why the two don’t mate.
And the answer is PRIDE. The Koreans seem bent on following in the steps of Toyota and building their own empire, but the Japanese didn’t stumble quite as hard as Hyundai did out of the gates. And Hyundai’s President Chung’s time table is running short at 70ish years old. While he may avoid jail time, he will be the last. The Korean people are not so quietly revolting against family run chaebols, and while Chung knows the pendulum swings both ways with laborer’s rights and their union’s strikes, he is too old (and too smart) to wait for the disastrous repeat of American Labor pricing itself right out of manufacturing, a fate the Korean Unions are blindly headed toward at breakneck speed.
So Volvo offers overseas production capacity the Koreans desperately need to offset their strong won woes, their distribution problems, their labor problems, and it’s a much quicker fix to a no-longer deserved reputation angst. Every blind product test proves Hyundai will outsell even the best of the competition so a Volvo badge could only help. The distribution system would be a win-win for Hyundai with both current Volvo dealerships dying to get their hands on a Hyundai franchise giving them access to new markets and Hyundai Dealers wanting even more of a better thing.
But the answer is still PRIDE. Hyundai has brought three superior products to market in the Azera, Entourage and most recently, the Veracruz. All three are considered best in class by various auto aficionados, but sales have been lackluster. Unlike Korea where almost 70% of the market is owned by Hyundai and getting a new Hyundai model is almost like getting a new iPhone, Americans simply aren’t aware of the product yet and the Koreans don’t understand it (and are reluctant to spend the money to get the message out). Maybe a Volvo badge is just what the product needs, but will the Koreans admit it?
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