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Having Thrived in America, Hyundai Takes On Europe

The Korean automaker uses its high-quality, low-price strategy to compete with Volkswagen

Big car companies spend millions of dollars on ads to burnish their brands. But Hyundai Motor received one of its biggest boosts from an unlikely source: competitor Volkswagen. In a video shot during the Frankfurt Motor Show in September, VW Chief Executive Officer Martin Winterkorn is seen praising the adjustable steering column on a Hyundai i30 compact, effectively anointing Hyundai as a top rival. “Nothing rattles,” Winterkorn said to his entourage in the amateur video posted on YouTube. “Why can they do it? BMW can’t. We can’t.” The video has been viewed more than 1.6 million times.

Winterkorn’s praising a small hatchback that starts at €15,490 ($19,990) in Germany—10 percent less than VW’s best-selling Golf—says a lot about the aggressiveness of Hyundai’s strategy. The Seoul-based company has made its name selling quality cars that are priced less than the competition. Hyundai has used that combination successfully in the U.S., where it and Kia Motors, the sister brand it has controlled since 1998, have leapt to the No. 2 spot among foreign carmakers. In the U.S. last year, Hyundai and Kia sold 1.13 million vehicles—more than triple Volkswagen’s 324,401.