Hyundai Walking Supply-Side Tightrope With Dealers

Special Coverage

NADA Convention & Exposition

SAN FRANCISCO – Hyundai Motor America CEO John Krafcik promises U.S. dealers will receive the volume boost they’re calling for, but the auto maker is wary of potential pitfalls.

“It would be easier to just say, ‘OK, we’ll add another plant,’” Krafcik tells Ward’s here at the National Automobile Dealers Assn. convention.

“But what you can never know when you make a decision like that is what unknown stressors are you putting on the system that could lead to something really unfortunate happening from a quality standpoint.”

Krafcik’s words are particularly poignant, coming nearly 12 months to the day of Akio Toyoda’s dramatic appearance in Washington, D.C. The Toyota Motor president and CEO told legislators, “We pursued growth over the speed at which we were able to develop our people and our organization.”

The auto maker’s haste was linked to several accidents, prompting Toyoda to issue an apology. Against this backdrop, Hyundai dealers are clamoring for more product on the heels of 2010’s 23.7% U.S. sales increase over prior-year.

“It’s our biggest burden right now; it’s almost everything we’ve got,” Krafcik says, listing the Sonata midsize sedan, all-new Elantra compact sedan and Santa Fe and Tucson cross/utility vehicles.

Hyundai Motor Mfg. Alabama’s plant in Montgomery, AL, home to the Santa Fe and Tucson, will pursue a “kaizen” approach to increasing production, Krafcik says. Adding a third shift to the 2-shift plant is unlikely.

“We’re very self-conscious right now about expanding too quickly,” he adds. “Our idea is it makes a lot more sense to move in measured fashion. (But) we don’t want to get complacent.”

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John Krafcik cautious.