Goodbye Tucson, hello ix35

HYUNDAI’S new ix35 compact SUV is likely to be the star of an extensive brand advertising campaign when it goes on sale in Australia early next year.

The Korean maker’s Australian subsidiary is studying whether it should release the all-new compact SUV or the i20 light-hatch first here in 2010, when it will also release a replacement for the mid-sized Sonata sedan.

“In theory we could launch all three of those cars in the first quarter,” said Hyundai Motor Company Australia (HMCA) sales and marketing boss Kevin McCann at last week’s launch of the facelifted Santa Fe medium SUV.

“We’re debating that at the moment, but we have to decide whether it’s better to have this huge launch activity with heaps of critical mass and all the associated issues ... or just spread it out over a few months and have something to say more consistently.” Asked if the ix35 – Hyundai’s headline act at September’s Frankfurt motor show - could be the main attraction of a renewed brand marketing push next year, Mr McCann said: “That’s definitely an angle we’re considering.

“We’re currently researching via focus groups and product clinics which one would have the most resonance to use as the hero. I’m hoping that it’s ix35, but I always have to balance the gut with data.

“I’d like for my gut to be backed up by research that says the ix35 hits all the hot spots, because it’s not a matter of (just) ticking all the boxes - it actually has to hit home runs,” he said.

Either way, the German-designed LM-series ix35 will be more expensive at both ends of the range than the Tucson, which opens at $25,490 for the front-wheel drive 2.0-litre Tucson City SX.

“The actual list price won’t be as low as it is today but the additional price will be more than compensated for by the additional equipment as standard, which will represent outstanding value for money,” said Mr McCann.

The 2WD City attracts 90 per cent of buyers for the Tucson, which was Australia’s top-selling compact SUV in September, making it one of the most popular models in the segment in its own right.

A front-drive version of the new ix35 will be available after the decision not to continue the Tucson City on sale alongside the ix35, which Mr McCann was seriously considered, before “the brand argument won in that case” because “we’re a little impatient to build our brand”.

It will be powered by the same 2.0-litre ‘Theta II’ petrol engine from sister brand Kia’s Cerato small-car, which produces 115kW and 194Nm of torque – up from the City’s 104kW/184Nm.

Unlike the 2.7-litre petrol V6-powered Tucson AWD (priced from $31,490), the all-wheel drive ix35 should come with a 2.4-litre Theta II petrol four from the Sonata (and Kia’s new Sorento), plus a 135kW/329Nm 2.0-litre version of the Santa Fe’s (and Sorento’s) new 145kW/436Nm 2.2-litre R-series turbo-diesel.

As such, Hyundai expects a broader customer base despite the higher pricetag, which HMCA chief executive Edward Lee vows to keep as affordable as possible.

“I think (it will be positioned higher than the Tucson) because ix35 is a great product and we put a lot more equipment in,” said Mr Lee.

“We will do everything we can do (on price) because we have the number-one sales market share in compact SUV, so we want to maintain that with our new product.” Mr McCann, who is a convert after driving the diesel ix35 – some examples of which are already in Australia – said he expected Hyundai’s first ‘ix’ crossover model to be even more successful than the Tucson.

“The ix35 will build on Tucson’s great success in the very competitive compact SUV segment,” he said. “It is a brand-new model with a much wider range of vehicles that will give us a broader footprint in the segment, so we’re expecting great things from it.

“Compact SUV is more than two sub-segments there’s a price end, a premium end and 2WD/4WD elements too. We’ve really only been successful at the 2WD end, albeit in a very dominant way, so the new range will give us the opportunity to have a great car in the 4WD part of it as well.

“It is a great car that looks good and drives well. The 2.0-litre R engine still has all that responsiveness because it is lighter.” Mr McCann said HMCA was confident the ix35 would maintain the top-three segment position of the Tucson, monthly sales of which started at around 600 before easily surpassing 1000 more recently.

“We need to protect the 1000 position and 200 or so more would be a bonus,” he said.

Apart from Subaru’s top-selling Forester and Toyota’s RAV4, the ix35 will also face stiff competition from Hyundai’s own mid-sized Santa Fe, which was launched last week as a facelifted all-diesel, all-seven-seat model.

HMCA is keen not to knobble sales of top-end ix35 variants and has confirmed that unlike its predecessor the Santa Fe will remain an AWD-only model powered exclusively by diesel, which comprised 85 per cent of previous Santa Fe sales.

In contrast with Kia’s architecturally related Sorento SUV, a 2WD 2.4-litre version of the Santa Fe is not available in right-hand drive, and Hyundai will not import a 3.5-litre V6 2WD version to replace the discontinued 3.3-litre V6 2WD.

Instead, HMCA has homologated an AWD four-cylinder Santa Fe, which continues to undergo Australian market evaluation.

“People associate front-drive as price entry, which worked well with Tucson but not for Santa Fe,” said Mr McCann. “We’ve chosen not to take the 3.5 2WD for that reason and that is still the only 2WD offered to us in RHD.

“However, there is a 2.4 AWD available but we want to make sure that we thoroughly evaluate that driveline combination before we make a decision on it. That’s our intention.

“Equally the new ix35 is being handled in such as way that we’re giving that model a much wider spread so we have to also look at how ix35 and Santa Fe will work together,” said Mr McCann.

The local Hyundai sales chief said a price-leading 2.4-litre AWD seven-seat version was eventually expected to help double sales of the Santa Fe, which so far this year lies eight in the medium SUV segment with a lowly 2.9 per cent share – but only if it does not cannibalise ix35 sales.

“The current view is that you have an entry-level front-wheel drive ix35 with a small petrol engine,” he said. “Some certain steps up in various versions of the ix35, you add AWD and diesel engines in different combinations and then at the top-end of that we start to overlap the current Santa Fe.

“The ix will be a five-seater and at this stage there will be no five-seat Santa Fe, so if we see an opportunity for a lower-power, less expensive Santa Fe after we’ve been in the market for a period of time, the differentiator would still be seven seats.

“If we bring a lower Santa Fe model we need to look at what that might do to (sales of) the ix35, but I definitely think we need to improve on the previous (Santa Fe) model’s sales, which were a little patchy from beginning to end.

“We had some inconsistencies in our engine strategy and the decision not include ESP in our entry-level model received some criticism as a consequence, which opened the door for our competitors.

“So the new (Santa Fe) model is essentially designed to address those areas we felt we could have done better. Repackage, re price-point and go back into the market with a different message, so it should improve in sales.

“I would say the improvement will be about a doubling of the sales rate on a monthly basis over time – a 2.9 per cent share is flatter than the rest of our model range.” Mr McCann said the Santa Fe’s natural position within the medium SUV pecking order was “probably in line with overall – fourth or fifth”.

“(But) it will need one or two more variations to get to that level.”