Hyundai Motor(005380) launched the eighth-generation compact sedan Avante and raised the starting price by trim by about 3 million won compared with the previous model (released in Apr. last year), drawing mixed reactions. Some say consumers feel psychological resistance because the perceived price of the "national first car" in the low 20 million–low 30 million won range has risen sharply. Some also analyze that the performance upgrade and the resulting price increase are an attempt to absorb even Sonata demand. Attention is on how this will affect future sales.
According to the finished car industry on the 7th, the eighth-generation Avante is priced at 23.98 million–31.52 million won for the gasoline and 30.42–36.99 million won for the hybrid. Compared with the seventh generation, the starting price of all trims rose by 3–4 million won. As the body grew closer to a midsize sedan, the low-priced (Smart) trim maintained through the seventh-generation Avante was removed, and the next-generation infotainment system "Pleos Connect" and various intelligent safety features were added to upgrade the model. As a result, the fully loaded price of the eighth-generation Avante hybrid exceeds 41 million won.
◇ Perceived price up with complicated options... fully loaded exceeds 41 million won
For the hybrid model, the starting price of the top trim, Inspiration, rose 11.7% (4.34 million won) to 36.99 million won compared with the previous model. It saw the largest increase among gasoline and hybrids combined. It features a 14.6-inch Pleos, a 9.9-inch driver's display, and GlaeO artificial intelligence (AI). Highway Driving Assist 2 (HDA2), navigation-based Smart Cruise Control 2 (NSCC2), and P gear emergency braking are also standard.
With the price increase and the changed option structure, some say the increase consumers actually feel has grown even larger. The seventh-generation Inspiration trim was effectively fully loaded. The only selectable options were the sunroof, built-in cam, and exterior colors. Digital Key 2, which enables remote start, was also included.
But in the eighth-generation Inspiration, many of those functions must be selected as options. These include Platinum (900,000 won), which includes Hi-Pass, and Parking Assistant II (1.3 million won), which includes memory reverse assist, Surround View Monitor, and front and rear parking collision-avoidance assist. Adding these widens the gap with the previous model to more than about 6.5 million won. Comparing fully loaded models, the seventh generation is 33.98 million won and the eighth generation is 41.69 million won.
The mid-level trims show a similar trend. In the seventh-generation mid trim, Modern, items such as Hi-Pass and Digital Key 2 were standard, but in the eighth-generation mid trim, Premium, they changed to options (930,000 won). Also, to add the 9.9-inch driver's display, you must add an option (830,000 won) that includes the 14.9-inch Pleos, which is larger than the standard 12.9-inch. This complex option setup is why critics say it raises consumers' perceived prices.
The price structure has not only worsened. Unlike the seventh generation, where heated seats were optional, they are standard in the eighth generation. High-end features such as P gear emergency braking, instead pedal misapplication safety assist, NSCC2, and an LED auxiliary brake light are also standard. The eighth-generation mid trim is priced at 27.71 million won for the Avante gasoline and 33.61 million won for the hybrid. Those are up 3.83 million won and 4.27 million won, respectively, from the seventh generation.
Even comparing the cheapest trim of each generation, the price gap is similar. The eighth-generation base trim, Modern, is 23.98 million won for the gasoline and 30.42 million won for the hybrid. Those are up 3.36 million won and 3.84 million won, respectively. The Pleos is 12.9 inches, and both the driver's display and GlaeO AI must be added as options. This contrasts with the Grandeur, where Pleos is standard across all trims.
A Hyundai Motor official said, "When various intelligent safety technologies are applied as standard to a vehicle, not only sensors attached to the wheels but also parts such as cameras and radars are added to the vehicle, which acts as a factor in raising prices," and explained, "For the gasoline model, the engine changed from a 1.6L gasoline engine to a 2.0L, and the body grew as well."
◇ Avante targets those in their 20s and 30s, but the top pick for those in their 20s and 30s is Model Y
Hyundai Motor has recently repeated cases where it removed lower trims and either included premium specifications from the start or installed only some and left the rest as options, resulting in a higher average selling price of vehicles. The fully revamped Grandeur hybrid released in May saw its starting price for the base trim rise about 5 million won as motor performance improved and features such as pedal misapplication safety assist and Pleos were applied. The Seltos also rose by nearly 3 million won in the full revamp early this year as smart cruise control, airbags, and light-emitting diode (LED) headlamps were added.
The industry is watching how consumers will react to these price hikes. The increase is not small given the image of the "national first car" as a first car for people in their 20s and 30s just starting their careers and a practical sedan that weighs price and fuel economy. The start is decent. Hyundai Motor said more than 10,000 Avantes were contracted on the first day of launch.
But while Hyundai Motor has been raising prices, Tesla and BYD have been increasing their shares and chasing Hyundai Motor. Total new registrations for Model Y last month reached 8,705 units. It beat the best-selling domestic car, the Grandeur (8,532 units), by 173 units to take the top spot in Korea's overall passenger car market.
BYD recorded cumulative sales of 14,521 units this year. That is up 820% from the same period last year. Riding the steep growth, BYD surpassed cumulative sales of 20,000 units in just 12 months from Aug. last year, when statistics began to be recorded.
In particular, the number of those in their 20s and 30s choosing Tesla increased further from last year. According to the Kaizuyu Data Research Institute, the car most purchased by people in their 20s and 30s through July this year was the Tesla Model Y. A total of 19,314 units were sold. That surpassed the 17,282 units for the full year last year. No. 2 was the Sorento (12,912 units), No. 3 the Sportage (10,459 units), No. 4 the Seltos (6,783 units), and No. 5 the Santa Fe (6,564 units).
The Avante ranks seventh with 5,773 units. Avante sales totaled 17,127 units last year, similar to the Model Y, but the gap has widened sharply in just a year. Sales fell ahead of the new model launch, and the question is whether the pricier new model can win over those in their 20s and 30s.
Some also analyze that, given shrinking demand for the Sonata, which was positioned above the Avante, Hyundai Motor is pursuing a strategy to absorb that demand with the Grandeur and the Avante.
Park Cheol-wan, a professor in the Department of Smart Mobility at Seojeong University, said, "There are many new models that can substitute for the national first car, such as the Casper and the EV series," and added, "There will be initial consumer resistance, but it appears to be a move to raise the Avante's price and encroach on the Sonata market."
Meanwhile, some voices point out that adding options has effectively widened the price increase. An industry official said, "Seeing that items included as standard in the previous generation were taken out as options, there is also criticism that prices were raised through a 'sleight-of-hand increase,' so we may need to watch sales trends for a while."