Hyundai Ready To Add Capacity After Two-Year Break
After a two-year break in expansion mandated by Hyundai Motor Company Chairman Chung Mong-koo in order to avoid quality issues experienced by Toyota during their aggressive growing spurt in the 2000s, Hyundai and Kia are both looking through feasibilities studies to determine where to invest in expanding their manufacturing footprint.
Though the mandate is still in place, the expansion freeze is putting the pressure on both brands’ existing factories to produce more vehicles as it is. In 2013, Hyundai and Kia utilized 105 percent capacity of their factories around the globe, with those in the Southeastern United States running flat-out between 125 percent and 135 percent on two shifts per day.
Sources closes to the expansion plans noted the current ban, though highly beneficial to the parent automaker’s bottom line, is ultimately unsustainable for future success; Hyundai aims to sell nearly 8 million units globally in 2014, and expansion into Mexico and China — and possibly the U.S., though through a cautious approach due to tougher competition in a tight market — would help move the goal post past 8 million
The renewed interest in expansion comes as costs in labor and languid growth prospects in the automaker’s home market are prompting competitors — such as General Motors — to cut back on manufacturing and export, something Hyundai refuses to contemplate. Thus, the search for “investment opportunities” outside of a local market set to peak at 1.6 million sales annually through 2020 beginning in 2016, including three sites in China, whose local market could see 33 million to 38 million sales annually by 2020.
If approved, the fourth Chinese factory would be Hyundai’s first major manufacturing capacity investment since opening their third plant in 2012 alongside one in Brazil, both announced prior to the expansion ban in 2010 and 2008, respectively.
That said, Chung could veto any new expansion investment should such plans be presented.
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I think Mexico plant should be announced pretty soon, they already began Mexico sales operatinos - finally - it was weird Hyundai wasn´t in Mexico officialy - under Chrysler just thanks to deal. I think Mexico plant would be logicall next step for Hyundai-Kia for NA region + from Mexico they can export in all corners of the world, because MEX has so many FTA deals with many countries, but at least they should make Hyundai-possibly even Kia cars mainly for US-Canada market, because their potential is bigger, they just can´t sell more in NA currently with their plant running at full capacity and with strong Won it is not so effective right now increas korean imports to NA. Also China is reality and in future i think they will add plant in ASEAN too, but i read interview with some top guy from Hyundai that it doesn´t make sense to have plant in ASEAN while there exports to this region are small so far, but unless you don´t have plant you can´t be big i think, Hyundai is decent player in Phillipines - No.3, but they are nothing in Indonesia, Thailand, Malaysia - 3 biggest markets there.
I just thought I would post a comment since this seems to be such an unloved topic. Hyundai seems to keep its capacity pretty tight. I have looked at a few Hyundai's in the past and was really surprised by their unwillingness to deal on price and the fact that they dont even have lease programs on every car. It seems that Hyundai is not interested in playing the volume war with the Americans and Japanese. Good for them keeping inventory in check.