By on June 15, 2011

Bloomberg [via Automotive News [sub]] reports:

“We’ve now been able to secure production capacity to safely say that we will surpass 600,000 units,” Mike O’Brien, Hyundai’s vice president for U.S. corporate and product planning, told reporters here Tuesday.

The South Korea-based company said in January it didn’t have enough production capacity to meet that level of U.S. sales.

Since then, Hyundai has raised output at its Montgomery, Ala., plant that makes Sonatas and Elantras, and it will also have a larger supply of the new Accent subcompact from South Korea than initially planned

 

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37 Comments on “Hyundai Hits The Gas: Bumps Output In Search Of 600k+ Sales...”


  • avatar
    highdesertcat

    And I wish them well. Hyundai sure has come a long way and are currently much in demand, especially in the Sonata and Elantra models. Best warranty in the business. A viable alternative to Toyondasan, and at a better price to boot.

  • avatar
    benzaholic

    You know, with all the automotive industry sunsets we’ve witnessed (Saturn, Oldsmobile, Pontiac, Mercury, manual transmissions, etc.), it’s nice to see big swings in the other direction like Hyundai has achieved of late.
    That’s going to be a very tough pace to maintain, so it remains to be seen over the next decade or so if Hyundai can pull off what Audi did a few decades back in successfully repositioning the brand upmarket a notch or six.

    • 0 avatar
      highdesertcat

      And look at what Hyundai (and other foreigners) have done for America. They created much needed jobs for Americans, building quality cars for Americans, in America. What’s not to like? Yet, there is nothing but flak coming from the UAW.

      And without sounding political, I have to ask, what has the UAW done for its members and its employers? What we do know is that the UAW has collectively bargained their members out of jobs, caused their employers to move American jobs to Mexico, and they caused the death of GM and Chrysler. From the UAW’s point of view this must be a good thing because they continue to live large on the tax payer dime and want to bring this same joy to non-union plants.

      This is not the vision of hope and change I have for America. We need to do a lot better than that.

      • 0 avatar
        bd2

        Eh, while the UAW and other unions have gotten fat and lazy, so too has management.

        Over the past 20 yrs or so, the thing to do was to ship jobs overseas (mostly to China) and then have upper management award each other fatter paychecks for “cost-cutting.”

      • 0 avatar
        highdesertcat

        bd2, management is actually run by the board of directors of a company, and the board decides what is adequate compensation for that position. In order to keep good people they have to pay them ever-higher compensation. The same does not apply to labor.

        Labor is a different ball game altogether. Labor gets a fair wage for a day’s work and that’s where the expectation ends. There are always more candidates for labor openings than there are jobs available.

        What the UAW has done too often in the past is to strike their employers and demand higher wages even though their products were not in the same league, or sold as well, as their competition. Laborers can be replaced easily but company officers and managers cannot. In order for a company to survive it has to sell its product. The US auto companies just didn’t sell enough of their products to be profitable because more people chose to buy a better foreign product.

        It seems to me that Hyundai has got it right and has achieved a nice balance for its workforce. The laborers get paid a fair wage for their work and make a decent living. The UAW worries about what their CEO and management gets paid instead of putting out a decent product. Hyundai products sell, and sell well. Hyundai is profitable. Hyundai has not had to declare bankruptcy.

        Hyundai and other foreign companies are expanding production in the US and hiring more non-union workers while the UAW has lost a big chunk of its membership due to lost jobs, many of which that went to non-UAW laborers in Mexico where their employers relocated to get away from the UAW.

        If faced with that situation it would appear to me that the UAW would rather have its members working in the US rather than losing those US-jobs to Mexicans. But that’s not how things unraveled over the past 20 years. The UAW effective bargained GM and Chrysler into the grave and no doubt will try to do the same again to Ford later this year or next.

        With Ford having told the world recently that its reorg has been completed, there is no doubt in my mind that the UAW will try to destroy Ford like it did GM and Chrysler.

      • 0 avatar
        bd2

        @highdesertcat

        And those executive compensation boards are full of other top level excutives – so they just fill each others pockets.

        I was privy to a lot of these shenanigans (not to mention moving one’s $$ to off-shore tax shelters), and believe me, many of these execs are grossly overpaid.

        In comparison to Japanese, German or Korean execs, American execs make significantly more, and you can’t tell me these execs are any less talented? (Much less being more talented than American execs during the 50s-70s when the disparity in pay btwn top exec pay and the avg. worker was significantly less.)

        And where exactly are these CEOs going to go? There’s a limited quantity in high paying big corporate executive positions.

        And let’s not forget those fat, golden parachutes awarding top execs even when they drive a company to the ground.

        The CEO of an auto parts maker, despite leading the company into bankruptcy, recently made over $20 million in annual compensation.

        And let’s not forget Robert Nardelli’s $210 million dollar “golden boot” when he left Home Depot.

      • 0 avatar
        highdesertcat

        bd2, you are absolutely correct in everything you stated but that’s just the way of the world. Labor has no expectations beyond a fair day’s wages for a fair day’s labor. Labor doesn’t share in the risks nor does it share in the R&D planning and organizing stages. All labor does is show up to do the work. It’s been that way since the beginning of time. Henry Ford built his entire empire on that concept — a fair day’s pay. Nothing else.

        What executives and management get paid in addition to their benefits is set out in a contractual agreement, usually based on their education and experience. I don’t see any of that changing. If labor tries to have that changed through the current administration or the current NLRB, my guess would be that a lot of the best and brightest CEOs, Execs and managers would leave the US and go to work for nations that are going to pay them what they are worth. Just how much cred is Sergio Marchionne going to give the UAW when Sergio holds the majority stake and decides to press on to start making Fiatslers in Italy, Brazil, Mexico, etc, and call them Alfa-Romeo or the like?

        There was a guy, on another board, who told us about taking a buyout from his employer in the aircraft maintenance industry because he did not want to move to a foreign country where his employer was setting up shop. It was too expensive for the company to continue in the US. But he also noted that most of the younger guys ended up going overseas with that company as managers at triple the pay that they were getting stateside. Tax free! Reading between the lines I would say that all they needed those guys for was to interpret the FAA rules on maintaining commercial aircraft in a foreign location.

        If labor keeps pushing their employers to go to Mexico and the like, all we have left will be US auto makers that make a very large part of their products in a foreign country. The foreigners already beat labor by moving to right-to-work states.

        Once labor bargains themselves out of jobs, those jobs are gone and the token ‘new’ jobs created in the US are but a fraction of what those same manufacturers create in Mexico and elsewhere.

        What I’m saying is, if you’re labor, Tread Lightly! We already know what happened when unions keep pushing their employers into bankruptcy or worse. They pack up their marbles and leave to go elsewhere.

      • 0 avatar
        bd2

        I would differentiate entrepreuners who take the risk of starting a company (or coming up with a new product) from the “run of the mill” CEO.

        And really, no CEO or other top execs are worth HUNDREDS of millions in compensation for a few years work, not to mention ridiculous retirement packages.

        Take for instance the insane $400 million dollar retirement package for former Exxon-Mobil chairman Lee Raymond in 2006.

        It’s not like the guy wasn’t already more than handsomely paid – getting paid $51 million in 2005.

        And it’s not like Exxon-Mobil has skipped a beat since then (don’t really have to do much when there’s rising demand in the BRIC nations, not to mention all the oil speculators pumping up the price of oil).

        The people who are getting screwed are the shareholders of Exxon-Mobil. Sure they have done well, but really, little of that has to do with any one individual and a huge amount of what should be going into their pockets as additional dividends gets siphoned off into the pockets of a few.

        Also, where would all these execs go? No country pays its execs more than the US (not even close).

        And specifically looking at the auto industry, the CEOs of VW, Toyota, Daimler, BMW, Honda, Hyundai, etc. all made a good bit LESS than Ford’s Alan Mulally – and all those automakers are in considerably better financial shape than Ford and they all have to deal w/ strong unions.

  • avatar
    gslippy

    The new Accent will certainly reverse the sales trend of the current model.

    Any similar data on Cousin Kia? I would think that the Soul, Optima, and pending redesigned Rio will dominate.

  • avatar
    tparkit

    H/K’s competitors are in for some thin times ahead — maybe even rough enough to goad Honda management into upgrading their transmissions… Nah.

    • 0 avatar
      gslippy

      I think Honda and Toyota have the most to lose from a rising Hyundai. Honda’s products are looking pretty stale these days, although Toyota isn’t far behind.

      Can anyone really tell the difference between a 2003 and 2011 Corolla, or a 2006 and 2012 Civic?

  • avatar
    don1967

    Even my inner Hyundai fanboy thought I was taking a risk by being one of the first new Elantra owners. Surely the Santa Fe was just lucky, and I would eventually go running back to Nissan or Honda.

    Nope. The Elantra is proving itself a mechanical gem, in addition to being a leading piece of design work. It has overthrown the Santa Fe for lead role in our family; a modern-day 1990s Honda Accord.

    Those waiting for Hyundai to screw up will have to wait a little longer. The company is a juggernaut, and by increasing production capacity on its core models it will be giving the competition even bigger nightmares for some time to come.

  • avatar
    dwford

    At sales of 20k a month for the Elantra and Sonata each, 480,000 total, that doesn’t leave much left of the 600,000 for the Santa Fe, Tucson, Accent, Veloster, Genesis sedan, Genesis coupe, Azera, Veracruz, and Equus….

    • 0 avatar
      bd2

      At current sales pace, Hyundai would hit 630K for the year.

    • 0 avatar
      dwford

      6 months ago, my dealership had almost 200 new Hyundais on the lot. Today we have 10, yes 10!! And 2 are Azeras, 1 is a Veracruz, and 1 is a Genesis Coupe. No Elantras, no Accents, no Tucsons, and 1 Sonata. Hyundai sales are on fire. Inventory is very tight right now.

  • avatar
    akitadog

    I’m kind of surprised that the Tucson’s sales are more or less flat, considering the redesign runs rings around the old one.

    • 0 avatar
      bd2

      Both the Tuscon and Sportage are a bit small for American preferences and considering their demand overseas, the discounts on the 2 aren’t as big as for say, the Nissan Rogue.

      Considering its sales, the larger Sorento seems to hit the “sweetspot” in size; likely to see a big bump in Santa Fe sales when the new model hits dealer lots.

    • 0 avatar
      bryanska

      Ya know, I agree. We bought a 2010 and it was pretty much the same as the Rogue but better in all ways.

      Plus the fuel economy tops all others, and the equipment list is (like all Hyundais) most bang for the buck.

      And the frame is pre-drilled and threaded for a hitch. Ya got me why it isn’t doing better. Probably because they’ve been discounting the Santa Fe like moldy peaches since before we bought our Tucson in March 2010. It was cheaper to buy a Sante Fe GLS than a Tucson Limited.

    • 0 avatar
      dwford

      Hyundai has never supplied the dealers with enough Tucsons. Could have sold many more over the last 2 years. Also, with the rebates, the larger Santa Fe is actually cheaper than the Tucson, comparably equipped.

  • avatar
    Conslaw

    Let’s see how well Hyundai’s quality holds up at this production pace. It’s hard to make a top-quality car. It’s got to be twice as hard to make a top quality car while you’re running a plant two shifts with heavy overtime.

    • 0 avatar
      don1967

      I did find a couple of minor paint flaws in my ’11 Elantra. Other than that, its quality control matches any of the Nissans or Hondas I’ve owned over the years, and beats most of them.

  • avatar
    Joss

    Hyundai’s jumping ahead in leaps & bounds. Doubly surprising when taking into account the lack of factory rebates compared to H & T. Toyota will give you this, Honda that but visit your Hy store and its pretty well full MRSP right now.

    Wonder when this will start a reversal on Hy’s traditional steeper depreciation?

    • 0 avatar
      bd2

      It’s already started with the newer Hyundai models starting with the Sonata, followed by the Tuscon, Elantra and Accent – due to a combination of transaction prices closer to MSRP (due to Hyundai cutting back sharply on incentives), sharp cutbacks on fleet sales and just overall increased desirability over the older models.

  • avatar
    kitzler

    gslippy, you might want to add nissan to Toyota and Honda, all Nissan does is keep the same design and play with the tail and headlight treatment.

    Next time I buy Asian, it will definitely be Korean. Just cannot figure how they can keep their prices so competitive, even after assembling some of their vehicles stateside. Sure is a success story.

  • avatar
    Bryce

    Hyundai and KIA deserve to succeed they have good peoducts rhat people want and they have them now not as promised new wonder cars Japan got washed away Detroit is still tripping over itself these guys did the hard part establishing themselves and now they stand ready to clean up

  • avatar
    NN

    Sorry to piss on the Hyundai love-fest, but to this day, I still have never once seen a Korean car with over 150k on the odometer. Clearly on the dealer lot they present themselves well as being nicely styled and representing great value. But I think people are too quick to elevate them to the level of Toyota/Honda/Nissan. Initial quality on Hyundai’s is very good–we know that, but long term durability and low maintenance are very different subjects.

    I’m not saying Hyundai won’t get there, I think they will. But people who buy Toyonda’s do so because they are the best at long term durability and low maintenance. Hyundai still has a long ways to go to build an equal reputation.

    • 0 avatar
      kitzler

      NN to my knowledge, people who drive their cars past 80K miles are not interested in cars, they just want reliable transportation. I think most people in this forum love cars, opt for new cars and get rid of them after a few years. the thrill of trying something new!

    • 0 avatar
      dwford

      At my dealership, we rarely see a Hyundai trade in until it has passed 100k. How long a car lasts has a lot to do with how the owner maintains it.

    • 0 avatar
      don1967

      I still have never once seen a Korean car with over 150k on the odometer.

      How do you know that exactly? Do you inspect the odometer of every car you see on the road?

      Old biases die hard.

  • avatar
    kitzler

    FYI highdesertcat, all US citizens are subject to US income taxes, irrespective where and how long they are located away from the home base. You may be exempted from paying taxes to your new home, such as US civilians working under the Nato status of forces agreement, but you are still liable for US income tax. Interesting to note, the US is the only country in the world that taxes its citizens, even when they live in a foreign land.

    • 0 avatar
      highdesertcat

      kitzler, I don’t know about how things are now, but I spent almost eight years with the military in Europe during the seventies, and most recently my son spent more than seven years working as a civilian in Shinjuku from 1998 – 2005 for a Japanese bank. Neither one of us had to pay income taxes to the US government.

      But, things could have changed since then, since neither one of us has to work now, and without ‘earned income’ we file no taxes at all because our incomes are below the magic cut-off. BTW, I have several former buddies from my military days who now live in Europe after marrying local girls, but I don’t believe they pay any taxes to the US government either, even though they work for ARAMCO or the Dubai Port Authority, and others.

      And then there are all the contractors who currently work in Kuwait, Iraq, Afghanistan, and other unpublished locations, and I don’t believe they pay income taxes on their income. If they had to pay taxes, it wouldn’t pay for them to go overseas since their incomes exceed $400K each.

      I don’t know anything about the author of the post I quoted other than what he posted. A lot of Americans go overseas to work so there must be something appealing to that, aside from being in an exotic locale.

      I was more interested in the fact that his employer decided to move aircraft maintenance facilities to foreign soil rather than having their profits here marginalized with high taxes and union demands.

  • avatar
    kitzler

    highdesertcat, I worked with the military in Germany, and they all bitched that they had to pay US taxes. FYI IRS form 2251 is the one you use to report income earned outside the US, we used to get an $86,000 exclusion to make up for paying local income taxes. That exclusion can be obtained by filing the above IRS form.

    Your son might have qualified for the exclusion, ergo no Federal tax, but you being in the military, I think you are mistaken. Of course if you got away with it, more power to you.

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