Hyundai to shuffle crossover portfolio

LOS ANGELES -- Hyundai plans to restructure its crossover lineup in the coming years with the addition of two small models at the bottom of its range and a repositioning of the current trio of crossovers to more closely match the rest of the industry.

The changes, outlined by Hyundai Motor America CEO Dave Zuchowski in an interview at the Los Angeles Auto Show, will allow the automaker to better fulfill runaway demand for crossovers as consumers increasingly turn away from sedans.

 "It's a game changer for us," Zuchowski said. "It's not just adding new vehicles, it's doing a better job of positioning a family of CUVs."

Hyundai plans to add a B-segment small crossover -- due on sale in early 2018 -- and then an A-segment crossover. At the same time, it will recast the existing lineup of the compact Tucson and Santa Fe Sport models and the midsize Santa Fe, Zuchowski said.

To achieve greater differentiation -- and volume -- the Santa Fe will grow to a true eight-passenger crossover. The Santa Fe Sport will also grow in size and adopt a more rugged persona akin to a Jeep. The Tucson, in turn, will grow slightly but maintain its conservative aesthetic.

Hyundai will also rename the largest crossover, Zuchowski said, since consumers get confused between the Santa Fe Sport and the larger Santa Fe and about how they line up against rival crossovers.

The changes will all take place between next year and 2020, Zuchowski said. As the new generation of models comes online, they'll also be part of Hyundai's plan to offer 14 alternative-fuel vehicles by 2020.

"As we've said, product is the lifeblood of any brand," Zuchowski said. "If that's true and I believe it's true, we feel pretty good about what we've got in the pipeline."

The new B-segment vehicle is particularly important since subcompact crossovers are the fastest-growing segment in the industry. Hyundai's entry in 2018 will be relatively late in the game. Chevy, Honda, Subaru, Nissan, Fiat, Jeep, Mazda and Mini already offer such a vehicle in the U.S. market; Toyota and Ford debuted their new models at the L.A. show.

While the larger crossover portfolio will also mean fatter profit margins for Hyundai, Zuchowski cautioned that the surge of new crossovers to market from a variety of automakers will trim some of that potential.

"When you take collectively all of the new CUVs that are coming through all the manufacturers, you're going to get a little bit of the same effect, supply and demand," Zuchowski said. "Margins will come down, incentive costs will come up in those segments. So I think it will even out over time."