Already struggling to meet demand for the Sonata, Hyundai is now running short of the new Elantra.
Hyundai is giving serious thought to adding a second U.S. assembly plant, the maker struggling to find ways to keep up with booming demand for the new Sonata sedan and other increasingly popular models.
The South Korean carmaker saw its sales surge 24% in 2010, volume reaching a record 540,000. That included an all-time high 200,000 Sonatas, a midsize model that was a runner-up in the closely-followed North American Car of the Year competition. (The trophy went to the Chevrolet Volt.)
Adding a second plant is “something we’re going to look at,” said John Krafcik, CEO of Hyundai Motor America, during an appearance at the Detroit Auto Show. A decision will “probably (come) after this year,” he added.
While there is no question that Hyundai could use more capacity, right now, the maker wants to ensure that the surge in demand is sustainable. It would take several years, at the quickest, to bring an additional factory on line and the maker doesn’t want to see itself stuck with excess capacity by the time that happens.
Hyundai is well aware of the vagaries of the market. In the years immediately after its launch on the U.S. market, 25 years ago, the maker responded to booming sales by setting up a plant in Bromont, Quebec. But quality problems and other issues led to slumping sales and Hyundai was forced to close that facility in 2004, barely five years after it opened.
In the near-term, the maker is struggling to find ways to fill the gaps. It is pushing for more cars out of its Korean plants, for one thing, and it recently began producing the Santa Fe sport-utility vehicle on the West Point, Georgia assembly line run by its sibling brand, Kia.
But with the new Elantra sedan showing signs of duplicating the success of the Sonata, there could be trouble ahead, as both are now being produced at the Hyundai plant in Montgomery, Alabama.
“Our biggest problem for the next year is that we’re not sure we’re going to have enough product to meet demand,” Dave Zuchowski, Hyundai’s U.S. sales director, told the trade publication Automotive News.
Hyundai’s market share rose from 4.2% to 4.6% in 2010, and perhaps more significantly, the number of car buyers considering the brand has shot from barely 20%, five years ago, to more than 30%. That suggests demand could soon surge past 600,000, company officials predict – if they can come up with enough cars, trucks and crossovers.