Hyundai may extend car return program-U.S. CEO

DETROIT Wed Oct 21, 2009 1:42pm EDT

DETROIT Oct 21 (Reuters) - Hyundai Motor Co Ltd (005380.KS) is considering extending its successful U.S. incentive program that allows consumers to return vehicles if they lose their jobs, its U.S. chief executive said on Wednesday.

The "Hyundai Assurance Program," which began in January and was widely copied by rivals including General Motors Co [GM.UL] and Ford Motor Co (F.N) contributed to the South Korean automaker increasing sales and expanding market share in a slumping U.S. market.

Hyundai North America Chief Executive John Krafcik told Reuters that the automaker will keep the car return program through the end of 2009, adding, "We're thinking now about how much further we should take it."

Fewer than 50 consumers have returned their vehicles under the program, Krafcik said.

Hyundai's U.S. sales rose 2 percent to 342,217 vehicles in the first nine months of this year from a year earlier, while overall U.S. auto sales fell almost 30 percent.

Hyundai, whose U.S. market share topped 4 percent this year, aims to increase its share further and in 2009 will be one of the few manufacturers to increase sales over last year, Krafcik said. He declined to give a target for increasing the market share.

Industry-wide U.S. auto sales are expected to be in the range of 10 million to 10.5 million units in the fourth quarter on an annualized basis, Krafcik forecast, adding that the market will improve to 11 million to 11.5 million units next year.

"We are being conservative for next year in our expectations," Krafcik said.

He spoke on the sidelines of a meeting on U.S. fuel efficiency and greenhouse gas standards for 2012 to 2016 model year vehicles hosted by the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration.

"We desire to be the No. 1 fuel economy brand in the United States, we are No. 3 right now. As quickly as possible," Krafcik said.

Hyundai has a fuel economy rating for its fleet of vehicles of about 28 to 29 miles per gallon, trailing Toyota Motor Corp (7203.T) and Honda Motor Co (7267.T).

In improving its fuel economy average, Hyundai will rely mainly on four-cylinder cars and "hundreds of incremental changes" that will make the fleet more efficient, from turbocharged engines to improved aerodynamics to fuel injection improvements. Tweaking the systems to make them more efficient is a constant at Hyundai, he said.

For Hyundai, "Hybrids will play a role, but they're not going to play a significant role," he said. "They are very expensive. And Americans have shown, at least in the current gasoline price regime, that they are not able to make that cost-benefit trade-off."

Hyundai has about 785 U.S. dealers that sell its brands, a number he expects to hold flat in the coming year at a time when others are cutting dealerships.

"There's no plan to expand," said Krafcik. "That seems like a good number."

Earlier this year Hyundai expected "natural attrition" to decrease the number of its U.S. dealers.

"But frankly, we've exceeded our business plan this year and I think that's really helped our dealers.

"For our brand, and I don't know how many brands can say this, dealer profitability is up in 2009 compared to 2008. Our dealers are making more money this year than they made last year." (Editing by Soyoung Kim and Steve Orlofsky)