Hyundai No Longer Chasing U.S. Sales

PORTLAND, OR – Hyundai's resistance to adding plant capacity despite increasing consumer demand is a sign the brand is growing up, says the Korean brand’s U.S. chief.

"It's driven very much by our chairman (Mong-Koo Chung), and I think it reflects a new kind of maturity," Hyundai Motor America CEO John Krafcik tells WardsAuto during a Veloster media event here. It's a big shift.”

Hyundai Elantra demand strong.

Hyundai for years pursued volume in the U.S., often setting what appeared to be unreachable sales goals as part of its tenacious reach for a greater presence here.

But Krafcik says the current corporate consensus is that adding capacity by building a new assembly plant or expanding its existing site would compromise the auto maker’s hard-fought quality and reliability gains.

Hyundai's U.S. inventory levels have been at historic lows in recent months as its sole North American factory in Montgomery, AL, struggles to keep up with demand for its hot-selling models.

The most notable are the locally made Sonata midsize sedan, which this year should surpass 200,000 sales for the first time, and the Elantra compact car, which Hyundai says could sell 20,000 units a month if capacity were available.

Krafcik admits Hyundai likely is losing sales to other makes because potential buyers can't get the car they want. "Is it a lot? We don't know. It's hard to say. We're doing everything we can to mitigate that."

But strategies that worked in the past, such as eking out slightly more production, may soon fall short.

Earlier this year, there was a boost in cycle time at the 6-year-old Montgomery plant. The increased output, which Krafcik describes as a low-investment, low quality-risk exercise, gave the factory its best-ever month in August, with 32,300 units produced, WardsAuto data shows.

"How long can you keep going like that? I don't know," he says.

While Hyundai may not be able to increase the number of cars and light trucks available to U.S. consumers, it is working with dealers for better allocate units and inform buyers when they can expect their vehicles.

The brand now has tools to give dealers more access to its production schedules, meaning they can tell a customer where their vehicle is along the manufacturing and delivery timeline.

"That's a very helpful tool," Krafcik says. Dealers can tell customers, “‘You are right; your Elantra isn't here now. But here's where it is. It should be here in 12 days.'"

Citing data showing inventory levels dropping but sales staying flat, he says Hyundai is "figuring out" how to meet demand.

Reflecting on the auto maker’s aggressiveness in prior years, Krafcik isn’t giving up on Hyundai increasing volume in 2012.

When asked if, without a boost in production capacity, Hyundai's U.S. sales next year would match 2011’s expected 600,000 units, he says, "We certainly want much more than flat."

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