A labor dispute between Korea'sMotor Co. Ltd. and its union is delaying the U.S. launch of the automaker's new Santa Fe sport/utility vehicle (SUV) until late summer, says Finbarr J. O'Neill, president of Hyundai Motor America.
The car-based SUV originally was to go into production in April, but assembly of the Santa Fe isn't starting until this month, Mr. O'Neill says. Prices will range from $17,000-$23,000.
's plant in Ulsan in southeast Korea will produce 50,000 Santa Fe models this year, Mr. O'Neill forecasts. Hyundai has set its sights on building 150,000 Santa Fe SUVs next year.
Based on the Sonata car platform, the Santa Fe is built on the same line as the Trajet minivan sold in Korea and Europe. The Sonata is produced at Hyundai's Asan, Korea, plant.
Despite his forecast that the pace of auto sales will slow in the second half, the Hyundai executive says he sees his company having a better year than 1999. “We hope we will insulate ourselves from the vagaries of market cycles,” he says. Reduced warranty costs and rebates have helped Hyundai's financial picture, he adds.
Mr. O'Neill expects Hyundai to sell about 220,000 vehicles in the U.S. this year, up 34% from 1999. Included in that are 100,000 Elantras, 45,000 Sonatas, 50,000 Accents, 15,000 Tiburons, 10,000 Santa Fe SUVs and 3,000 flagship XG sedans.
Sales are improving along with a better reputation for quality that currently is backed up by a 10-year warranty. “If we didn't improve our image we were going to die,” Mr. O'Neill says. The results have been startling. In 1998, 60% of Hyundai dealers sold 10 cars or less per month. That's fallen to only 14% of dealers, and more than 50% of dealers now sell at least 25 cars per month.
The labor dispute that has slowed the Santa Fe launch centered around the transfer of 500 employees to work on the new line that will be used to assemble the SUV. The conflict was resolved in an overall labor settlement that called for the return of workers on layoff. But before the settlement was reached, there was a strike in April and two-hour labor stoppages on other days. “It cost us about 60 days,” Mr. O'Neill says.