Hyundai’s US dealerships struggle to meet demand

Article by Anita Panait, on September 12, 2012

Dealers for Hyundai in the United States are experiencing difficulties in coping with the demand. They realize that they could sell more only if the South Korean carmaker could replenish their inventories as fast as they could. Hyundai’s factories have lean inventories and are unable to keep up with the sales pace of the carmaker’s dealers.

As a result, transaction prices are increasing modestly with floorplan and incentive costs remaining low. Scott Fink, chairman of the Hyundai National Dealer Council, recalled that years ago, dealers wanting to replenish their inventories had no problem getting supplies since “there were tens of thousands of cars on the ground.”

Fink told Automotive News that the situation now is that there are practically no cars waiting for delivery to dealers. He said that dealers don’t have enough cars and the carmaker they are dealing for now doesn’t have enough cars as customers queue in line to buy vehicles.

Fink's flagship Hyundai dealership in New Port Richey, Fla., sold 555 new vehicles in August. Supply figures have been Hyundai dealers’ biggest problem. According to the Automotive News Data Center, on Sept. 1, Hyundai had a 29-day supply of vehicles, compared to the Ford brand with a 56-day supply, and Toyota with 40-day supply.

Bob Lisy, general manager of Ganley Westside Imports (Hyundai-Volkswagen-Subaru), told Automotive News that he has no more Sonata GLS in inventory. Hyundai posted its best August ever in the US in 2012, selling 61,099 vehicles for a 4 percent year-on-year increase. But the South Korean carmaker could have sold more last month, since the US industry posted a 20 growth in the period. The carmaker’s sales feat in August 2012 could be attributed to the fact that its dealers are selling vehicles faster than in the same month in 2011.

According to John Krafcik, chief executive of Hyundai Motor America, the average Hyundai vehicle is sold after 27 days on a dealership during the first eight months of 2012, compared with 34 days in the same period in 2011. Hyundai’s inventories have been tight since April 2011, as dealers have had to work with less than 30-day supply for most of the time, in contrast to the ideal figure of 60 days.

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