Bloomberg News

Hyundai Says U.S. Sales Growth May Slow on Plant Constraints

February 04, 2012

Feb. 3 (Bloomberg) -- Hyundai Motor Co., South Korea’s largest automaker, said tight production capacity and concern that quality might suffer may slow U.S. sales gains in 2012.

“What we’re trying to do is plant some seeds for future long-term growth, maybe giving up some short-term sales this year and next,” John Krafcik, chief executive officer of Hyundai’s U.S. sales unit, said today at a conference in Las Vegas hosted by J.D. Power & Associates. “It would be very easy at this period of great growth to make a mistake on quality.”

Hyundai’s tone going into 2012 differs from past years, when the Seoul-based automaker set ambitious growth targets. U.S. sales for Hyundai surged 61 percent in the past four years as new models and improved designs drew attention to a brand historically known more for value-oriented models.

Industrywide U.S. light-vehicle sales may rise at least 6 percent to 13.6 million this year, the average estimate of 18 analysts surveyed by Bloomberg in January. Hyundai hasn’t given a U.S. sales target for 2012, after posting a 20 percent gain last year.

Hyundai’s Montgomery, Alabama, plant that builds Sonata sedans and Elantra small cars produced a record 338,000 vehicles in 2011. That’s about 10 percent more than what the company expected entering the year, Krafcik said.

There is “probably not that same kind of opportunity” to replicate that production gain in 2012, he told reporters.

Hyundai has a “similar opportunity” to increase output of Santa Fe sport-utility vehicles from the factory in West Point, Georgia, where the company has a contract with affiliate Kia Motors Corp. That plant supplied about 90,000 vehicles for Hyundai last year, Krafcik said.

“We’re definitely going to grow retail market share,” Krafcik said. “It’s hard to say on the fleet side where it’s going to go.” The company said last month that fleet sales were 10 percent of its U.S. total in 2011.

Hyundai probably won’t lose U.S. market share this year, he said. The automaker will benefit from new models such as the Azera large sedan and Veloster three-door coupe, Krafcik said.

Hyundai’s U.S. sales unit is in Costa Mesa, California.

--Editors: John Lear, Cecile Daurat

To contact the reporters on this story: Alan Ohnsman in Las Vegas at aohnsman@bloomberg.net; Craig Trudell in Las Vegas at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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