HYUNDAI SAYS IMPENDING ALABAMA PLANT WILL EASE SHOWROOM SHORTAGES

Hyundai Motor America sees sales crossing the half-million mark, but not until the auto maker's forthcoming plant in Montgomery, AL, gives it the capacity it needs to do so, Hyundai brass tells Ward's.

Annual sales of 500,000 units would establish Hyundai as a top-tier auto maker in the U.S., says Robert F. Cosmai, Hyundai Motor America's vice president-national sales.

Hyundai has increased sales forecasts to 375,000 units this year, which would mark an 8% increase over last year. Important to Hyundai, the sales are moving up market.

Cosmai is confident the Korean auto maker could have passed 400,000 units here if U.S. operations received all the inventory it wanted from parent Hyundai Motor Co. Ltd.

“It's an issue,” says Cosmai, who has struggled with availability ever since the auto maker's star began to rise in this market.

He says Hyundai in the U.S. has been “in a back-order situation,” with sparse inventories on the Sonata sedan, Santa Fe SUV and Tiburon sport coupe.

On the Santa Fe, there is not just a shortage of vehicles but also transfer cases. North America is receiving a larger percentage of the 2-wheel-drive version than it wanted.

The forthcoming U.S. plant, slated to begin building the Santa Fe and Sonata in 2005, should ease the problem. The auto maker already has announced a capacity increase at the plant, to 300,000 units annually from original targets of 235,000 units.

The year also may mark the end of Hyundai's industry-leading 10-year powertrain warranty, which has been approved only through 2005.

“It's not the silver bullet that the Lone Ranger left on the table,” says Cosmai, meaning it's not the only factor driving buyers to the showrooms.

Hyundai first offered the unprecedented warranty in 1999 when sales were less than 100,000 and falling.