Hyundai Motor Company will use electric vehicles as an opportunity to target the slow start of Japanese brands and re-enter the Japanese market. The first product will be their strongest flagship electric vehicle the Ioniq 5.
South Korea's Hyundai has decided to challenge the Japanese market again and its flagship electric car, the Ioniq 5, gives them confidence.
In 2009, Hyundai Motor announced its withdrawal due to dismal sales in the Japanese market but, now that the situation has reversed, they believe that there are two opportunities to help Hyundai regain its success in the Japanese market.
"We have been preparing for a long time to ensure that the same mistakes will not be repeated," stated Hyundai CEO Jaehoon Chang. They must understand the market and customers. This time Hyundai will only sell electric vehicles in Japan and they will be sold entirely online.
Electric vehicle sales are growing rapidly in South Korea and Jaehoon Chang believes that the same opportunity exists in the Japanese market and sales may even grow faster than South Korea.
IONIQ repositions brand
Leading the charge is the Hyundai Ioniq 5 pure electric sports wagon, which is undoubtedly a very competitive product in the global electric vehicle market, and its competitors in Japan will be the Toyota bZ4X and Nissan Ariya. If brand is not considered, these two Japanese cars have no chance of winning against the Ioniq 5.
From the perspective of market demand, the latest survey shows that a quarter of potential Japanese buyers are considering switching to electric vehicles and the number of public charging piles is also increasing. The pure electric vehicle market is still in a very early stage in Japan. With less than 10,000 vehicles, there are opportunities for Hyundai to realize.
Yet in this important 4.5 million vehicles per year market, Hyundai has learned some hard lessons from its previous failure. "Japanese people know cars very well, so they have extremely high requirements for vehicle quality," Jaehoon Chang pointed out. From the experience of Samsung and LG, he believes that brand and product strategy are the most important keys.
▲BTS helping LG expand the market, Hyundai has also hired them as brand ambassadors.
Although it sounds a little weird, Hyundai's strategy is to downplay the "Hyundai" brand and switch to "Ioniq" products as their main brand image with pure electric and online sales, re-entering the Japanese market as an almost new brand, and avoiding being locked out by consumer stereotypes.
Japanese customers will resist walking into a Hyundai Showroom. Jaehoon Chang hopes that the online shopping habits developed during multiple past lockdowns can change this predicament. "We don't have a distribution system, so we can boldly try new sales channels," Jaehoon Chang pointed out. Hyundai wants customers to order, transact, insure, and register online, all without leaving the house.
The tough Japanese market
Despite a clear strategy, it will still be difficult to sell Korean cars in the Japanese market. "I don't understand why Hyundai wants to challenge the Japanese market at all," South Korean investment and safety consult analyst Kim Jinwoo pointed out. Although LG and Samsung have successfully entered the Japanese market, electric vehicles are a more expensive item and Japanese car owners may not be willing to buy them.
In contrast, the United States and Europe have higher demand for electric vehicles and analysts believe that Hyundai should focus on Europe and the United States, not Japan.
Sales price may be the first key. The Ioniq 5 is priced from US$45,000 in the US and the Nissan Ariya costs more than US$47,000. Pricing for the Toyota bZ4X has yet to be announced but it may be more expensive than the Ariya. If the price of the Ioniq 5 is competitive enough, that may increase the chance of success.
However, one of the reasons why Hyundai failed in Japan last time has not been resolved, and it is also the reason why many European and American car manufacturers have difficulty breaking into the Japanese market: the cars are too wide. Japan's narrow roads and parking spaces are an insurmountable challenge for overseas automakers. The Ioniq 5 is 1,890mm wide, 10-15 centimeters more than the Toyota Prius and sales champion Yaris, and is even 4 centimeters wider than the Toyota Alphard SUV. That will definitely affect the willingness of the Japanese middle class to buy the Ioniq.
▲Japan's relatively narrow road and parking lot design is a major obstacle
The last potential problem is the exact opposite side of the online sales coin. Although online car buying is transparent and convenient and can reduce the variables associated with dealers, it also reduces the faith of car owners. Since almost all electric cars rely on original manufacturer maintenance and repair, the lack of distribution and maintenance locations will be a stern logistics test for the Ioniq 5.
Hyundai has already established their service center in Yokohama and will open up multiple service locations in Japan in the future but it is still unknown whether expansion will be able to catch up to the Ioniq 5, which will start delivering in Japan in the middle of this year.
"Sometimes, you have to take bold actions," said Jaehoon Chang, who has lived in Japan twice. To reach the sales target of 1.7 million pure electric vehicles by 2026, it is necessary to sell in Japan.
（Image：Hyundai）