By Ben Klayman
SUPERIOR TOWNSHIP, Mich., July 12 Hyundai Motor
Co still expects its U.S. sales to grow by 4.4
percent this year even though it is dealing with production
capacity constraints brought on by the South Korean automaker's
decision to slow expansion globally.
In reaffirming a target set in February, North American
Chief Executive John Krafcik acknowledged on Friday that the
company's U.S. market share was down as it caps vehicle
production capacity globally at about 7 million vehicles a year
to ensure quality remains high.
"We are running our plants 24-7, three shifts, maximum
overtime, doing everything we can to keep up with demand,"
Krafcik said, adding the decision to limit output has led "110
percent" to the capacity constraints.
"For the last year or so, we have not been able to grow as
fast as the market, so we've lost a little bit of share this
year," he added. "We have tapped everything at this point."
Krafcik declined to comment on whether Hyundai has a new
plant in North America coming. "For now, we've taken a
couple-of-year pause," he said. "I can't say when that pause is
going to end."
Hyundai said in May that it was considering building new
assembly plants outside South Korea. Analysts have said labor
disputes in its home market and the rising South Korean currency
could push Hyundai to build more vehicles overseas, but the
company has said it has no immediate plans to build another U.S.
While industry-wide U.S. auto sales rose 9 percent in June
and the annual pace in the month raced to its strongest level
since November 2007, Hyundai's sales rose only 1.9 percent.
Hyundai's U.S. sales this year are still on track to hit
734,000 cars and sport utility vehicles, and its market share is
heading for 4.7 percent, Krafcik told reporters at the company's
technical center outside Detroit. That would compare with sales
in 2012 of 703,007 vehicles and a market share of 4.9 percent.
Krafcik expects the company's U.S. sales in the second half
of the year to be a little stronger, and acknowledged that U.S.
demand has come back a little faster than the automaker thought
Hyundai was the fastest-growing automaker during the recent
recession, but its sales increases have cooled due to the lack
of availability of new cars. Its 2012 U.S. sales rose 8.9
Krafcik said the company's U.S. inventory of vehicles was
the second-lowest in the industry among non-premium brands at 44
days. That has allowed the company to avoid generous incentives
for consumers; the average incentive per vehicle at $1,237 is
second-lowest among mainstream brands.
The executive said it does not make sense for Hyundai to put
more money into incentives in the U.S. market at this point.
Hyundai previously added a third shift at its assembly plant
in Montgomery, Alabama, boosting annual production capacity by
60,000 vehicles. Krafcik said it was possible that more vehicles
from overseas could help ease supply constraints in the U.S.
market, something that helped incrementally last year.
Hyundai is looking at additional vehicles in the premium
segment, but nothing had been approved for production, Krafcik
said. A small crossover vehicle below its Tucson sport utility
vehicle is another option, he added.
"Our growth potential and where we might want to put future
products is probably on the crossover side of the table,"
Krafcik said. "No plans for that right now, but it seems sort of
"It's something we have to look at," he added about a small
crossover. "It does seem like there's a lot of action in stuff
below the (Toyota ) RAV4, Tucson size."