By on January 4, 2017

2016 Hyundai Sonata, Image: Hyundai Motor America

There’s no shortage of uncertainty afflicting the auto industry these days, but Hyundai Motor Company is facing 2017 like a tense office worker determined to put on a brave face around its colleagues.

After seeing its 2016 delivery targets swamped by a wave of market reality — and after canning the CEO of its American division for missing his own targets — Hyundai claims the gray skies will clear up in the New Year.

The year 2016 is one Hyundai would prefer to forget. A Korean autoworker strike threw a wrench into its domestic operations, while changing consumer tastes in North America impacted its car-heavy lineup.

At home, the 12-week strike pushed sales down 7.8 percent last year, Bloomberg reports. Overseas, Hyundai and Kia sales dropped a collective 1.2 percent. It was the automaker’s first global decline in deliveries since the turn of the century — a collar-loosening case of sales fizzle after so many years of sizzle.

Now, just two weeks after firing its U.S. CEO and a week after reports of drastic cost-cutting measures, Hyundai is projecting sales growth of 4.7 percent this year. That means combined global sales of 8.25 million, up from last year’s 7.88 million. Rosy? Perhaps, but the automaker has a plan. A plan, it would seem, that existed before Dave Zuchowski’s termination.

The automaker promises new utility vehicles and improved product flow to the U.S., where sales actually rose in 2016. Hyundai recorded 768,057 sales in the U.S. last year, up from 761,710 in 2015. That increase occurred despite the buying public’s drastic turn away from passenger cars.

Besides the crossovers, the Genesis G70 luxury sedan should arrive next year to bolster the automaker’s overall sales tally. Still, the revamp of Hyundai’s crossover lineup won’t occur overnight, leaving the company’s targets sitting next to a big grain of salt. Reuters reports that the company’s own think tank predicted 1.9-percent growth for the coming year.

[Image: Hyundai Motor Company]

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21 Comments on “Never Mind Last Year, Hyundai Has a Good Feeling About Its 2017 Sales Targets...”

  • avatar
    SCE to AUX

    The new Ioniq has started well in South Korea, but it’s late to the US market. My initial excitement about this car is waning as the release date continues to slip, and its specs are ho-hum.

    The Kia Niro (based on the Ioniq) is also late. An early review says its drivetrain is weaksauce, but efficient.

    • 0 avatar

      Except the Niro is selling a good bit better than the Ioniq in Korea and Europe (where Kia has orders for 25k Niros).

      Kia made the wise choice in going with a crossover body-style rather than a lift-back – which is why Hyundai is working on their own PHEV/EV separate from the Ioniq.

      Basically, H/K will get a lift in 2017 sales from the launch of their respective sub-compact crossovers, as well as the Niro (and a lesser extent, the Ioniq); kind of like how Honda got a lift from a full year of HRV sales and the launch of the new Ridgeline in 2016.

      But they still need to increase supply of the Tucson, Sportage, Santa Fe, etc., as well as add a proper full-size crossover and not fiddle around and take so long in getting the Santa Cruz pick-up (and the Kia counterpart) to production.

      H/K, like VW and Cadillac, have been way too slow in moving to crossovers – but things should look much better by 2020.

  • avatar

    Hyundai had as many if not more crossover ERs than rivals even before the new entries. They had the Tucson and two flavors of Santa Fe. Honda can sell well with just the CR-V and Pilot. Or Toyota with the RAV4 and Highlander.

    Part of their problem is shoddy dealerships and more aspirational pricing than previously. Doesn’t help that cars like the Civic and Accord are class leading in their segments.

    • 0 avatar

      Hyundai has pointed to a lack of manufacturing capacity for crossovers as a reason for low sales, not a lack of models.

      • 0 avatar

        Fair enough, although it does raise the question why they are focusing on getting new CUV nameplates rather than expanding capacity. I would have thought using the manufacturing capacity planned for crossover X could more easily and cheaply be used for the existing Santa Fe and/or Tucson.
        Also I have heard this manufacturing capacity claim for at least two years. At some point that becomes es an excuse since they should be able to increase capacity (not at a days notice but within 2 years). I think there may be some truth to their claim but it is also a bit if an excuse. This shift to CUVs has been happening for a while now. It isn’t like they have run out if Tucson’s or Santa Fe’s to sell in the US.

        • 0 avatar

          Fair enough.
          I think they are trying to address the confusion between the Santa Fe and the Santa Fe Sport.

          My son really isn’t into cars. Yesterday he asks me: “Is there a difference between a Cherokee and a GRAND Cherokee?”

    • 0 avatar

      Um, Honda has the HR-V as well, not to mention the Ridgeline.

      And it’s not just the crossovers an automaker has in its lineup, but the supply/production capacity for a particular model.

      Honda can pump out nearly 360k CR-Vs alone – which is more than Hyundai’s entire production capacity at its Alabama plant.

      Hyundai finally increased supply of the Tucson to the US (which is why sales have increased from 47k in 2014 to 90k in 2016), but that’s still a far outcry from what Honda is able to produce when it comes to the CR-V.

      But changing production capacity is not so easy – it usually doesn’t happen unless a new plant is built or an existing one expanded and/or a switch-over in generation for models.

      • 0 avatar

        I had not included the HRV because it’s sales are a rounding error compared to the big 2 (CR-V and Pilot). You will be aware Toyota don’t have their subcompact CUV out. Some my comments stand.
        Production can be increased sometimes by increased overtime or other steps that increase, incrementally, output. If they are planning on bringing other CUVs to the US then they must have production capacity somewhere.
        Also even if they could make 360,000 Tucson’s they would not sell them all. Maybe the market is it around the 90K mark – there are plenty of very good CUVs for them to compete with.

        • 0 avatar

          While sales of the HR-V may be a “rounding error” compared to sales of the CR-V, it is not immaterial in comparison of overall crossover sales for Honda and Hyundai.

          As Honda sold nearly as many of the HR-V (82,041) as Hyundai did the Tucson (89,713).

          And Hyundai’s US plant and other plants around the world which manufacture crossovers are running 3 shifts (except Korea – where the militant union prevents such things).

          Hyundai, with the latest Tucson, was able to increase supply to the US market, but its popularity elsewhere limits supply.

          For instance, the Tucson was the 2nd best selling compact crossover in Australia after the CX-5, outselling the RAV-4 (and far outselling the CR-V).

          In Europe. the Tucson shattered Hyundai sales records with Hyundai expecting to have sold 150k of them for 2016 (again, far outselling the CR-V).

          A similar story holds for the Sportage in Europe where the 2 likely passed the venerable Qashqai in sales for 2016.

          Hyundai’s Czech factory (which is running full-bore) supplies Europe, but the Ulsan factory has to supply Korea, the US, Canada, Australia and now Mexico (as Hyundai entered the Mexican market).

          Again, it’s a lot more complicated in adding production beyond adding more shifts (which have been done).

          For instance, Hyundai can’t simply shelve production of the current Accent and build a crossover in its place.

          Hyundai has to wait until the run of the current model is over – which is when we’ll see the next gen Accent and the new subcompact crossover built on the same line.

          The current Forte has been in production for nearly 4 years, but didn’t cross the 100k sales mark in the US until this past year.

          The only reason for the increase in sales was added supply coming from Kia’s new Mexico plant.

          Kia’s new Mexico plant should help – building the Sportage (and maybe even the Tucson for Hyundai) at the plant would help supply, but probably would be better for Kia to shift production of the Soul to Mexico (since the US is by far the largest market), as well as adding production of the new Rio (as gas prices have risen drastically in Mexico as the govt. is no longer subsidizing prices) – which would allow for greater production of the Sportage in Korea.

  • avatar

    I’m sure they have another scapegoat for next year when this doesn’t pan out.

  • avatar

    This way lieth ruin. Let’s see some margin goals and some quality goals. And of course, having the right product would help.

  • avatar

    Hyundai sales rose last year in the US, despite not being able to manufacture as many Santa Fes and Tucsons as they’d like. Why people are all “OH, THIS IS WHAT’S WRONG WITH HYUNDAI/KIA” is really kinda funny, especially when compared with some of the glaring missteps from bigger companies, like Chrysler, Nissan, and Honda. H/K are doing a LOT of things right. Owner satisfaction is through the roof. No one predicted the industry would suddenly enter CUV-crazed mode, and it’s gonna take some companies longer to adjust. Wasn’t it just three years ago that we thought the failure of the 200 and the Dart would mean the end of Chrysler altogether?

    • 0 avatar

      It’s not that ‘people’ are criticizing Hyundai for its results in 2016 – it’s Hyundai itself which is disappointed with their own performance, going so far as to can their US CEO.

      Reading comprehension.

    • 0 avatar

      It is inaccurate to say now that no-one foresaw the CUV thing. Companies like Chevy, Mazda and Honda all had sub compact CUVs out and companies like Nissan and Ford had three CUVs out (eg Escape, Edge and Explorer) so companies were prepared. Other companies proved adept to shuffling manufacturing plans.
      I am curious, what glaring mis steps have Honda made?

      • 0 avatar

        It’s not like H/K entirely missed the boat on crossovers.

        They both have had sub-compact crossovers for the BRIC markets for some time, but decided that the NA/European markets would get a different model (part of the problem is that Hyundai has been overly infatuated with the China market).

        And Kia will have 2 new crossovers on the market this year, including the 1st PHEV/EV crossover by a mainstream brand.

    • 0 avatar

      “Wasn’t it just three years ago that we thought the failure of the 200 and the Dart would mean the end of Chrysler altogether?”

      The thesis of that argument is that FCA is far too dependent on Jeep and Ram. Now, if you’d like to disprove that, have at it…but I can guarantee you Sergio Marchionne wouldn’t be able to if he was being honest.

      FCA has no fall back position if sales of pickups and CUV/SUVs go down.

  • avatar

    I have a bad habit of judging car manufacturers by how quickly their moderately old cars rust. I saw an old (8yr?) Santa Fe which had bumper to bumper rust just yesterday. Then I read this. Anyway, I am not sure why somebody would buy one of these over a Honda or Toyota when resale value is considered.

  • avatar

    I recently bought a new compact and shopped Hyundai, so I can say the product isn’t really the problem. The Elantra is a thoroughly decent little car – it’s not something an enthusiast would appreciate, but as a transportation appliance you’d drive for three or four years and then trade in, it beats the snot out a Corolla.

    I’d say the pricing and dealerships are the problem. And it’s not that the pricing is “aspirational” – in reality, the price on the sticker is aspirational, but Hyundais are discounted VERY steeply. Dealers around here are advertising $4-5,000 off Elantras.

    And I suppose that’s a decent dealership sales strategy, but it undercuts the perception of product quality, and doesn’t build brand loyalty. If Elantras are as good as Civics or Corollas, then why are they giving them away?

    To make things worse, every Hyundai dealer I shopped wouldn’t quote me lease figures over email. They all insisted I “come in and make my best deal.” Yeah, right.

    Maybe that kind of thing doesn’t matter to a 20-year-old community college student with 572 credit and two jobs at big-box stores, or a blue-light-special buyer, but it matters to someone like me. It was a no-sale moment for the car I was looking at, and for the whole brand in general.

    If they want to move upmarket, I’d suggest doing a Saturn-style pricing strategy – price the product where it should be to begin with, and eliminate the deals-a-plenty antics. Instead of stickering an Elantra at $21,000 and selling it for $17,000, why not sell it for $18,500, no haggle? At that price point, the car is a VERY solid value.

    With this kind of strategy, they could focus buyers’ attention on the cars, and build some brand loyalty. I think the product is good enough to do that.

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