The 2013 Hyundai Elantra: How Americans Fell in Love With This Small Stylish Car

Hyundai (HYMTF 3.44%) has mastered the art of pleasing its American clientele, and Elantra is an excellent case in point -- it was named the 'North American Car of the Year ' at the 2012 North American International Auto Show. Elantra, in its three avatars of sedan, coupe, and hatchback, is ruling the roost in the U.S. compact car market, taking on formidable rivals like Ford (F 0.08%) Focus and General Motors' (GM -0.04%) Chevrolet Cruze.

The 2013 Hyundai Elantra. Photo credit: Hyundai Motors.

Ever since the Elantra's 2011 makeover, its sales have shot up significantly, accounting for roughly a quarter of Hyundai's total North American sales last year. As the car nears the end of its four-to-five-year life cycle and the market gets excited over its relaunch in late 2015, here are the key takeaways for investors.

Solid position in the small car segment
In 2012, Americans bought nearly 14.5 million light vehicles , with small cars alone crossing the 2.8 million mark. As more people opt for fuel-efficient cars to tackle fuel price volatility, small cars are assuming greater importance in the U.S. auto market. Small cars typically include compacts, sub-compacts, city cars, sporty hatchbacks, tall hatchbacks, and compact crossovers .

With Hyundai selling more than 200,000 Elantras last year , the car has emerged as its top seller in the compact segment. The Elantra commanded nearly 7% of the American small car market last year.

Elantra's success story has continued into 2013, with torrid sales growth throughout the summer. Although volumes have normalized since then, monthly sales numbers have remained consistently higher than last year's levels. Hyundai will produce close to 400,000 units this year at its auto assembly plant in Montgomery, Ala., after turning out a record 361,000 units last year.

Source: GoodCarBadCar.net

It's interesting to see Elantra's sales growing even as gas prices fall -- an environment in which bigger cars are selling more. After peaking at $3.79 per gallon in February, gasoline prices fell to $3.27 per gallon by October.  And unlike the Elantra, sales of popular small cars like Focus and Cruze declined significantly in October. That divergence suggests that Elantra enjoys a competitive edge and a loyal customer base.

Source: GoodCarBadCar.net 

The secret behind Elantra's popularity

In 2011, Hyundai's now-famous 'Fluidic Sculpture' design changed the game for Elantra, making the car look like it was in motion, even when it wasn't. The style attracted buyers in hordes, as reflected in Elantra's sales numbers over the years. And, two years since the makeover, Elantra still remains a style icon.

 Source: GoodCarBadCar.net 

Elantra's other trump card is its city mileage, which places it ahead of Cruze and Focus. What's more, the Elantra ranks higher than the Cruze and isn't not too far from the Focus in consumer ratings on the automotive website thecarconnection.com. 

Source: thecarconnection.com 

More upsides

Industry sources are already talking about another major overhaul in Elantra's design. The redesigned car is likely to enter the market in the second half of 2015. The car's new look will be crafted by the renowned German designer, Peter Schreyer , who has recently joined Hyundai-Kia Motor Group as one of its presidents.

Schreyer is best known in the industry for his contribution in designing the original Audi TT during his tenure at Volkswagen and Audi. He now wants to work his magic on Hyundai cars. The new Elantra is likely to be leaner, powered by super-efficient turbo engines.

If the new design lives up to Elantra fans' expectations, there is every possibility that history will repeat itself, and Elantra sales will surge yet again. If this happens, Hyundai's foothold in the compact market will strengthen considerably, giving a huge push to its American prospects, which is critical for its overall success.

The U.S. ranks as the world's second-largest automotive market after China, and offers big opportunities as it moves toward pre-recessionary sales levels. Edmunds.com predicts sales of light vehicles in the U.S. to hit 16.4 million in 2014 . The U.S. is also Hyundai's most significant market, accounting for 16% of total sales in 2012. Last year, the company sold more cars in the U.S. than in its home market of Korea.

Source: 2012 Annual report and GoodCarBadCar.net;     sales are in thousands of units.

Final take

Elantra is among Hyundai's most important cars for the North American market, and its success is essential for the company's growth in the region. So far, Hyundai's strategies with Elantra have worked, and sales have risen at a good pace. If Elantra's 2015 makeover is as big a hit as its 2011 overhaul, there will be no looking back for the car or its maker.