Hyundai stalls on free-trade savings

HYUNDAI Australia won't be dropping the prices of its line-up as the Free Trade Agreement (FTA) with South Korea rolls out.

The FTA with South Korea kicked off on December 12, but the FTA with Japan, which comes into effect this Thursday, January 15, has already seen Japanese makers such as Subaru passing the savings on to customers.

Earlier this month, Subaru announced price cuts in direct response to the Japan FTA, cutting the price of the Forester by $1000, taking $750 from the price of the XV and $500 from the list price of the Impreza.

It also launched a new Liberty and Outback range with prices cut by up to a whopping $14,000 compared to the previous versions.

Hyundai Australia boss John Elsworth says the Japanese makers currently have an advantage over Korean brands such as Hyundai and Kia.

"They have two things working for them at the moment: a pretty weak yen and the FTA," Elsworth said. "We don't have that in Australia. We've got a historically strong won [and] we've got issues with the euro."

Both currencies are critical to Hyundai's success, as it sources cars such as the iX35 SUV from both its Czech factory and its South Korean plants, in order to keep up with Australian market demand.

"So the two currencies that impact our business are working against us," Elsworth said.

That means Hyundai dealers, who enjoyed a record year in 2014 to sell more than 100,000 vehicles for the first time, won't be cutting prices as the FTA comes into full effect.

"You have to look at the details. Diesels don't get it, so our diesel SUVs won't get the full five percent [cut]," Elsworth said.

"We don't have a plan to roll back pricing; we're going to do it as models get upgrades and look to pass on more features to consumers, so overall value rather than pricing."