Everyone experiences growing pains at some point in their life. Some are more debilitating than others. As it enter its 21st year in the US, Hyundai is feeling a few of its own. In a market dominated by overproduction and a seemingly insurmountable glut of models, Hyundai has a good problem to resolve... maybe. A labor strike in Korea coupled with strong worldwide demand means U.S. dealers can't get enough of the popular Korean-built cars like the three-door Accent -- an issue that may also extend to the new Elantra and the forthcoming reskinned Tiburon.
Before you can build cars, you have to have engines, right? The first issue to work on is improving the currently limited capacity to build four-cylinder engines. The inventory of these engines, which power both the Elantra and Accent, is now and will continue to be a huge problem until something changes. As a result, Hyundai has informed dealers that the automaker is likely to miss its '06 sales target here in the US. Even at full capacity, the plants may fall short of meeting global demand next year as well, prompting concerns that the '07 sales target could be jeopardized, as well.
Undercapacity and overwhelming demand for your products is an enviable position to be in for a short time. Once the issue begins to affect long-term profitability, however, somebody had better deal with it quickly.
[Source: Kathy Jackson, Automotive News via AutoWeek]
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Reader Comments (Page 1 of 1)
$0.02 @ Nov 2nd 2006 7:32AM
Hyundai, whose Chair has an incredible vision, but has been quite distracted, but even Hyundai underestimated the world demand for their products. I wanted to by my daughter a 3-door Accent last month and there was basically no chance of getting one. Who'da thunk it!
kwc @ Nov 2nd 2006 8:11AM
Hopefully they will have this resolved by late 2009 when the lease on my Mustang convertible is up, because I want that new Elantra for my commuter car!!!
Tal D @ Nov 2nd 2006 8:36AM
Hyundai has rapidly advanced from a producer of the Excel (probably "good" at best for the money and for the times) to a producer of some very good automobiles(probably very good to excellent values for the money in current times).
If the workers continue to strike whenever they feel like it, they could severely hinder the amazing advancement that they their company have achieved
I would think Hyundai could further position themselves further up the ladder of major automotive manufacturers in a quicker time than it has taken others to reach the higher positions.Who knows who they could surpass.
Disuptions such as strikes leaves a negative perception
on a company. Hopefully they are back to building some pretty nice vehicles.
Bob @ Nov 2nd 2006 11:27AM
Sigh. So much for getting an Accent SE hatch at a discount.
John L @ Nov 2nd 2006 11:29AM
Its small and it is a deathtrap, but the price of gas forces commuters like myself to have to drive tiny cars.
Pray you never hit a large deer or moose, or you will be decapitated. Or if you get T-boned in this thing, you will surely die. If you buy this car as your kids first car, you may as well be handing them a loaded pistol and tell them to play russian roulette.(if i spelled that right)
First cars for kids learning to drive should be a big old buick that sat in grannies, driveway or garage for the last few years, or some old heavy chevy.
This way the kid doesnt become crippled for life because of that inevitable first accident, and it happening in an eggshell of a car.
I own a Hyundai myself (SantaFe) and would buy them again, but I would want something bigger and safer.
This is all just my opinion so please dont flame me.
I crashed an 1984 Monte Carlo into a toyota tercel. I barely hit the thing and I pushed its back bumper into the body and under the rear windshield. Now imagine thats your family, or infant in the back seat of that car. Better yet, but a H3 or Sherman Tank.
Or a used Armored car from a bank auction. Now your safe.
Dom Hulick @ May 11th 2008 6:22PM
To your comment about the small cars vs. big cars. I see your point, but it wouldn't work with todays' society. For $4.50 a gallon of gas I would rather have the 4 cylinder Accent, and a huge V8 1980's chevy. The Accent has a 4 star crash test rating, and has 6 airbags. With the money you would save with a small fuel efficient car you could buy yourself a chauffeur(not sure if thats spelled correctly). Not everyone in the world is going to have the opportunity to have a large gas guzzler as their first car. Sooner or later the future will kick in, and everyone will have electric/ very fuel efficient compact cars.
Dave Thomas @ Nov 2nd 2006 12:05PM
Bob,
Yeah, Hyundai said there will be NO discounts on the Accent two-door hatch. sorry.
Howard @ Nov 2nd 2006 12:28PM
Not Hyundia but was in Toyota dealer last week. They were only taking orders for 4 cylinder Camrys and any version of Avalon. They had none in stock. Kind of a mixed blessing for the manufacturer and dealers. My take on this is that I will be wary of buying any car where production cannot keep up with demand. I can imagine the pressure on the assembly lines to up output and the effect that might have on quality and long term reliability.
Will be looking at Honda and Acura next. Amazing how hard it seems to be to produce a reliable mid size car with good fit and finish. I think all the producers got caught by suprise with the increase in demand for these vehicles. If I were willing to spend 40-50K then my options would open up (BMW 5, Lexus?, audi).
Andy @ Nov 2nd 2006 1:43PM
Demand for an Accent? Couldn't people turn to a Kia Rio, Nissan Versa, or Honda Fit?
aaron @ Nov 2nd 2006 11:21PM
An 84 Monte Carlo and a Tercel (also an 80's model?)? I'm guessing it wasn't a recent accident. No official test on the 2007 Accent but it sure looks a lot more solid than its' predecessor and you certainly can't compare todays B class cars to a late model (?) Tercel. There have been many innovations in car safety since the 80's.
james @ Nov 6th 2006 5:31PM
idiot comment by the small cars you will die in a accident!... I was driving a hyundai tiburon which is a small two door coupe I hit a car at 60MPH my front and side airbags went off and I don't have a scratch on me! New cars are alot safer then the ones of the early 80's
DJC @ Jan 2nd 2007 4:06AM
Very interesting post and certainly relevant for Hyundai at the moment considering projected demand slowdowns coinciding with current largest markets.
Check global auto report:
http://www.scotiabank.com/cda/content/0,1608,CID8339_LIDen,00.html
What I am hoping for is that you come up with solid Hyundai sources of profit-earning production capacity other than USA for the current growth markets of China, India, and South America online and running in 2007.
Any silence on it might confirm my research.
Cheers, DJC