Hyundai: Get Them While They're Hot!

Cammy Corrigan
by Cammy Corrigan

When Apple releases a new product, people wait in line for it. Steve Jobs talks, everyone buys. Apple often runs out of stuff that is in high demand. Usually, people will wait. Hyundai has a similar problem. But maybe not a similar solution.

The Montgomery Advertiser’s Cosby Woodruff just found out that, to his great horror, Hyundai’s operates their plant down in Alabama by what’s called the Just In Time production technique. Ever since Ignacio Lopez and his gang of ninja warriors left GM with boxes of documents in 1993, big manufacturers around the globe have switched to just in time. Someone should tell Woodruff that JIT is a great thing for real estate: One by one, suppliers will first build warehouses around the factory, then factories …

Having just found out about just in time, Woodruff thinks it leaves frighteningly little margin for errors. And when he says “little” he means it.

One example is the plant operating on “less than an hour’s supply of many key components.” Mindboggling, isn’t it? Another example is where the plant “rarely has more than 10,000 cars parked in its massive lot behind the plant”. (Actually, for hardcore just in timers, that’s a bad sign.)

Mr Woodruff then states that the problem is so great that to maintain a sustainable supply chain, managers are now monitoring the transit time from plant to dealership. After all, if a dealership has plenty of stock, then they won’t quibble about a 2 week transit time, unless maybe their stock is on the low side?

The scenario that Mr Woodruff paints is a very real one and while having many customers for your product is a great thing, it’s only great provided you have the stock to supply them. What’s the point in having customers at dealerships clamoring for the latest Sonata, only to find there are none available?

Which also brings up another scenario which Hyundai may want to pay attention to. Remember my comparison to Apple? The reason people wait for Apple products is because those customers rarely cross shop. It’s either Apple or nothing. Hyundai, as good as they may be, aren’t in that class. If customers can’t get hold of their Sonata in a reasonable amount of time, maybe the Toyota or Honda dealership across the street will be able to provide them with a suitable alternative at a much shorter delivery time?

To be fair, Hyundai has acknowledged that deep down in Alabama, this isn’t sustainable and needs to be fixed. “Consumer demand continues to significantly outstrip product availability at Hyundai dealerships, ” said Dave Zuchowski, Hyundai America’s vice president of sales. Then John Krafcik, CEO of Hyundai America, announced that expansion of their Alabama plant’s production capacity will go ahead. But in the mean time, if the scenario I laid out above happens, Hyundai may have trouble winning those customers back. Toyota is in ultra sensitive mode and will do all they can to be the golden boy again. Honda’s sales of the Accord are flagging and could do with a boost. Will Hyundai rectify the situation just in time? I don’t know, but with TTAC constantly monitoring US sales, we’ll find out soon enough.

Cammy Corrigan
Cammy Corrigan

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  • Dcdriver Dcdriver on Aug 09, 2010

    I may be one of the few who doesn't like the styling of the new Sonata. I like the previous version much better.

    • See 2 previous
    • Davey49 Davey49 on Aug 09, 2010

      I dislike the appearance of the current Sonata as well but cars should not be bought on basis of looks alone and it seems like a much better car.

  • AaronH AaronH on Aug 09, 2010

    Good for Hyundai! Good for USA Consumers! Hyundai's initial high Sonata demand is looking permanent...One of those "good" problems to have. Competitive free-market choices for consumers is always a great thing. Hyundai is also configuring manufacturing to deal with a new Santa Fe and Kia Optima...And Hyundai Elantra. Looks like Hyundai/Kia is now a permanent 1M+ unit / year USA competitor.

  • Dartdude The bottom line is that in the new America coming the elites don't want you and me to own cars. They are going to make building cars so expensive that the will only be for the very rich and connected. You will eat bugs and ride the bus and live in a 500sq-ft. apartment and like it. HUD wants to quit giving federal for any development for single family homes and don't be surprised that FHA aren't going to give loans for single family homes in the very near future.
  • Ravenuer The rear view of the Eldo coupe makes it look fat!
  • FreedMike This is before Cadillac styling went full scale nutty...and not particularly attractive, in my opinion.
  • JTiberius1701 Middle of April here in NE Ohio. And that can still be shaky. Also on my Fiesta ST, I use Michelin Pilot Sport A/S tires for the winter and Bridgestone Potenza for my summer tires. No issues at all.
  • TCowner We've had a 64.5 Mustang in the family for the past 40 years. It is all original, Rangoon Red coupe with 289 (one of the first instead of the 260), Rally Pac, 4-speed, factory air, every option. Always gets smiles and thumbs ups.
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