Hyundai is among the world’s largest vehicle manufacturers with millions of their products found across the globe in large numbers. However, many people don’t know why Hyundai is cheap compared to other brands of the same size.
In this article, I will explain to you in detail why Hyundai is cheap and the factors that contribute to its lower prices.
Why is Hyundai Cheap?
The South Korean giant Hyundai is cheap compared to Japanese, German or American brands as a result of several factors which are discussed below.
1. Company Policy & Market Penetration Strategy
Hyundai and its board of directors design a policy on how to get the largest market share in both United states and European markets.
This policy was designed to carry out intense research to come up with innovative ideas that will allow Hyundai to penetrate and gain a share of the global automobile market.
This led to the conclusion that for Hyundai to get a foothold in the markets, certain incentives must be put in place and the result is why we have now a policy which includes 10-year warranty, less costly cars and increased efficiency.
2. Sources of Material
Another factor that made Hyundai vehicles to be less expensive is the issue of sourcing the necessary materials and components in the production of the vehicles.
Because Hyundai sources its materials locally in South Korea, the cost of the materials are generally lesser compared to those that are imported as in the case of some other brands.
In fact, Hyundai owns the metal foundry producing all the metals it needed for use in its manufacturing plant.
Sourcing materials locally means the ability to produce at a cheaper rate, as well as sell it to the consumer at cheaper prices.
3. Cost of Labor
Hyundai Motors is known for producing high-quality cars at affordable prices. One of the reasons they are able to do this is because of their lower cost of labor.
Hyundai has factories in countries such as South Korea and India, where labor costs are lower than in many other countries.
This allows them to produce cars at a lower cost, which they can then pass on to consumers in the form of lower prices.
Additionally, Hyundai has invested heavily in automation and technology, which has further reduced their labor costs. By using advanced robotics and other technologies, Hyundai is able to produce cars more efficiently and with fewer workers, which helps to keep their costs down.
Overall, the lower cost of labor is a key factor in Hyundai’s ability to produce high-quality, affordable cars that are popular with consumers around the world.
4. Bulk Production
Bulk production is one of the key reasons why Hyundai Motors can produce cheaper cars. Hyundai is one of the largest car manufacturers in the world, and they have the ability to produce cars in large quantities.
This allows them to take advantage of economies of scale, which means that the cost per unit decreases as the volume of production increases.
By producing cars in bulk, Hyundai is able to negotiate better prices with suppliers for raw materials and components, as well as for shipping and logistics. They are also able to streamline their production processes and reduce waste, which helps to keep their costs down.
Overall, bulk production is a key factor in Hyundai’s ability to produce high-quality cars at affordable prices.
By taking advantage of economies of scale, they are able to offer customers a great value for their money, while still maintaining high standards of quality and reliability.
5. Brand name
Hyundai is established as being a brand for quality cars at affordable prices.
While the brand name of Hyundai is not the primary reason why their cars are cheaper, they will attempt to maintain it.
Compared to some other brands like Tesla, Mercedes and BMW which are known to price their vehicles at really high prices, they are not as popular as those other brands to charge similar prices.
Conclusion
It is not accurate to say that Hyundai cars are cheap because of apparent lack of quality. In fact, Hyundai has made significant strides in recent years to improve the quality and reliability of their cars especially post-2008.
They have invested heavily in research and development, and have implemented rigorous quality control processes to ensure that their cars meet high standards.
That being said, it is true that Hyundai is able to produce cheaper cars compared to some other brands. This is not because of a lack of quality, but rather because of their efficient production processes and economies of scale.
Hyundai is one of the largest car manufacturers in the world, and they have the ability to produce cars in large quantities, which helps to keep their costs down.
They also use advanced technology and automation to streamline their production processes, which further reduces their costs.
That said, below are the list of why Hyundai is cheap in comparison with other brands.
- Company policy
- Sources of material
- Cost of labour
- Bulk production
- Brand name