Hyundai-Kia expects lower sales due to fully tapped capacity

Article by Anita Panait, on April 16, 2013

South Korean carmakers Hyundai and Kia are expecting their rapid growth to slow down drastically this year after revealing that they are already utilizing their production capacity to the fullest. Hyundai-Kia revealed that their assembly lines are already operating in full with no capacity expansions under way soon.

This means that Hyundai-Kia’s sales are limited by the current production capacity they have. The carmakers posted a 9-percent year-on-year drop in retail sales in the United States, excluding fleet sales, in the first quarter of 2013 to around 248,900 vehicles. On the other hand, their rivals all managed to hike their retail sales in the same period.

The 9-percent drop in first-quarter sales this year is in sharp contrast to the 27-percent first-quarter jump in 2012 and the 52-percent first-quarter increase in 2011. Rob King, Hyundai dealer in Raleigh-Durham, N.C., told Automotive News that it is now harder to sell a Hyundai than when Japanese carmakers were lacking inventory. He noted that they have been in a seller's position.

King remarked that competition now is “more closely aligned” to some of the value proposition that Hyundai has had, adding that their customers can elect to acquire what they want, not just what a dealer has. Hyundai-Kia posted a 3-percent drop in total US sales, including fleet, in the first quarter of 2013, when the overall market surged 6 percent.

Hyundai says that shortages of key models and popular trim packages like the low-end Sonata GLS sedan have hurt sales. They also are running short of small-volume vehicles. John Krafcik, CEO of Hyundai Motor America noted that Hyundai’s South Korean site that assembles the Veloster can equip only 20 to 30 percent of Velosters with turbocharged engines, although demand in the US would back a 70 percent rate.

Topics: hyundai, kia, sales

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