Hyundai sales stall

Aussie Hyundai buyers who placed an order for a new car since mid-year have been playing the odds without even knowing it. If the desired car isn't in a popular colour, fitted with the most common options, the buyer is probably still waiting to take delivery.

The company's Korean plant workers went on strike some months ago and have only just returned to work this month. As a consequence, the local distribution arm has been struggling to meet demand for some Hyundai models.

The situation has been so dire for Hyundai, that even with three months of the year remaining to be reported by industry statistician VFACTS, the importer is unlikely to match last year's sales volumes.

Oliver Mann, General Manager for Marketing at Hyundai, agreed that the importer had not capitalised on strong sales growth during the first half of this year and that was doubly disappointing in the present climate of high fuel prices, since the company has a strong image as a purveyor of fuel-efficient cars.

Just as the industrial action in South Korea has been resolved, the Australian market has fallen into a slump, further hindering Hyundai's expansion plans in the country.

"We certainly should be [further ahead in sales]," said Mann, when questioned by the Carsales Network.

"Something that we chose not to publicise at the time was that we suffered severe shortages from around the middle of the year onwards, due to strikes at the Korean plant.

"I don't think any manufacturer likes to promote the fact there are strikes, so it wasn't promoted at the time, but as a significant back-order situation built up, we've had to communicate with dealers and customers to manage expectations of delivery. The strike was called off between two and three weeks ago. Since then, normal supply has been resumed. We've got a backlog of orders to catch up on...

"We're not where we would have liked to have been, but we're confident the situation is now improving and between now and the end of the year, we will recover our pace, if not the absolute volume," Mann said.

"I wouldn't expect [to recover the sales lost, relative to last year]. Based on the production that we've lost in this period... You can follow VFACTS month by month and track our performance, but certainly over the last couple of months, we've been significantly behind last year -- when at the midway point, we were looking pretty sweet."

Mann explained that industrial action in South Korea is not that uncommon and that's one reason Hyundai is looking to its plants in other countries to supply markets such as Australia.

"We will become less and less reliant on a single plant and a single country of manufacturer. I think that's going to be the strongest point in our favour," the Hyundai Australia marketing boss said.

"Strikes are not new in the industry. It's a point of record that each August -- in fact from the middle of July -- there are annual wage negotiations conducted within Hyundai and when they're successful, the supply line is smooth and occasionally we get caught up. But it's not something we dwell on, it's not something we plan around or expect to continue. As I say, we expect those to diminish in coming years, as we diversify our supply sources."

Diversifying means Hyundai shifting production responsibility 'offshore'. The company's Chennai plant in India is tasked with producing the new i10 and i20 light cars, which may come to Australia (see separate story here).

Thus despite the sales slow-down, the future looks brighter for Hyundai Down Under.

Mann says the company is moving to shore up export logistics, the product range is strengthening, with hybrids and other low consumption, low emission strategies on the horizon, and the local arm has just moved into swank new premises in the Sydney suburb of Macquarie Park.

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