Hyundai Pacing 700,000-Unit Sales Year; Third Shift to Bring Relief

CHULA VISTA, CA – Hyundai expects to hit its U.S. sales target of 700,000 units this year, despite a possible cooling of the industry, a top U.S. executive says.

"We have a very good shot at 700,000," John Krafcik, CEO-Hyundai Motor America, tells WardsAuto in an interview at a media event here.

Hyundai delivered 292,856 units through May, up from 263,588 in like-2011. The auto maker is particularly enthused that sales in each of the past three months have exceeded 60,000 vehicles.

While many auto makers suffered declines last month, underperforming industry expectations, Hyundai's 67,019 deliveries marked a second-best monthly tally for the brand. "You can do the math on that and see we have a shot at delivering" on targeted sales, Krafcik tells media during a presentation.

Hyundai is especially pleased to be selling more units to retail customers and fewer to fleets, a reversal from a few years ago, when the auto maker’s fleet mix was more than 10%, and in some years approached 20%. Last month, only 7% of deliveries went to fleets.

"There are reasons to have fleet; there's no question," Krafcik says. "But I think every auto maker would trade a retail sale for a fleet sale any day, even if it's a corporate fleet."

The Hyundai chief touts the brand’s growth in new-car retail sales this year, which he says hit 221,070 units in the first five months, compared with prior-year’s 187,496. That’s about 15,000 more units than the Ford brand delivered through May, Krafcik contends.

Nevertheless, the pace of Hyundai's growth has slowed in recent years, as the brand suffered from capacity constraints on many of its models.

Krafcik says Hyundai's 32 days’ supply of inventory in May was the lowest in the industry, with some models such as the non-turbo Veloster and new-for-'12 Azera taking just a dozen days to turn.

Hyundai hopes to ease the situation when it brings a third shift online at its Montgomery, AL, plant this fall. The facility produces the Sonata and Elantra sedans, both hot sellers that saw a sales dip in May.

"It was obvious to our corporate parent, as well as those of us in the U.S., that we needed more capacity," Krafcik says of the decision to add the shift at Montgomery. "We're very short on Elantra and a little short on Sonata. So this helps us fix that situation."

The third shift should add about 20,000 more vehicles to the factory’s planned 325,000-unit output for this year, Hyundai said earlier. However, some of those additional units are earmarked for Canada, Krafcik notes.

Substantially more Elantra and Sonata units will be built in 2013, with a full year of the third shift, he says, while not divulging the projected number.

Hyundai also is working with its Korean parent to receive more Velosters from the auto maker’s Ulsan, South Korea, plant.

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