Relief to Drum-Tight U.S. Inventories Coming, Hyundai Chief Says

DETROIT – Hyundai’s U.S. dealers soon will see relief on tight inventories of key products as the Korean auto maker solves engineering issues on the Sonata hybrid and Genesis sedans and pumps more Elantra compact cars into the retail channel.

Hyundai Motor America CEO John Krafcik tells Ward’s the Sonata hybrid, held up for some five months so engineers could update its virtual engine-sound simulator to meet coming regulations, currently is “shipping in volume and selling in volume.”

“Very strong,” he says of vehicle’s early performance, prior to accepting the Society of Automotive Engineers’ annual Industry Leadership Award here.

Hybrid vehicles soon will be required to have noisemakers drivers cannot disable; a rule intended to protect pedestrians, especially the blind. Hyundai is changing wire harnesses, switches and owner manuals to comply.

No small task, Krafcik says. “But it’s worth it. We’ll still sell the same amount, just in a shorter period of time.”

Hybrid models presently account for about 10% of all Sonata sales, which totaled 21,738 units last month. Even better, Krafcik says, Sonata online shoppers are choosing hybrid versions at a 30% clip.

“We don’t have that much capacity,” he jokes, “but it’s nice to know.”

Krafcik credits a two-trim-level approach to the Sonata hybrid, where one sells for a relatively thrifty $26,000 and a second version retails for about $31,000.

Hyundai left with scant 12 days’ supply of fuel-efficient Elantra last month.

“The actual hybrid premium is actually quite small when you consider the content” on the less-expensive trim, he says. But two-thirds are choosing the pricier version, which includes a technology package.

Krafcik says dealer deliveries of high-performance R-Spec versions of the Genesis luxury sedan will ramp up in June. Arrivals have been slowed by noise, vibration and harshness issues.

“It’s fixed,” he says, “or else we wouldn’t be shipping.”

Hyundai also has found itself tight on Elantra stocks, as consumers flock to fuel-sipping vehicles amid high gasoline prices. The compact car achieves more than 40 mpg (5.9 L/100 km) highway.

Last month, Hyundai sold 22,100 Elantras, closing April with a scant 12 day’s supply, according to Ward’s data. The industry typically likes a 60-days’.

George Glassman of Glassman Hyundai in metropolitan Detroit tells Ward’s, “We need more. More, more, more.”

Krafcik says a move earlier this year to limit fleet sales of the Elantra will start paying off. In fact, boosting the car’s retail allocations will hold the auto maker’s fleet deliveries to single digits the 12% range, he predicts.

“We’re seeing incredible demand,” Krafcik says, estimating dealer inventories of the car turn over four or five times a month. “We’ve never seen anything like that before. We thought Elantra would be a smash, but to see what is going on now is incredible.”

However, the high gas prices are proving to be a double-edged sword, keeping some buyers out of the market.

“You do get more indecision and sometimes that drives people to stay home,” he says.

But as the auto maker with the most fuel-efficient portfolio in the U.S, Hyundai is seeing an advantage.

Krafcik says the auto maker’s sales-rated corporate average fuel economy in April hit 36.2 mpg (6.5 L/100 km) and moved its year-to-date mark to 35.0 mpg (78.0 L/100 km). That would put Hyundai on par with 2016 CAFE targets.

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