Hyundai Motor expects sales of sport-utility to rise
CALIFORNIA: Hyundai Motor Co., the fastest growing mass-market automaker in the U.S., expects sales of its sportutility and crossover vehicles to rise faster than its cars in 2011.
"We have lots of upside opportunity on the car-based, light truck side of the market, in crossovers," U.S. Chief Executive John Krafcik said in an interview yesterday in La Jolla, California. Hyundai's share of U.S. retail car sales is about 7 percent and it's about 2 percent for light trucks, he said.
The Seoul-based company this week said U.S. sales rose 45 percent in November and 23 percent in 2010's first 11 months. The Sonata sedan, with a 65 percent gain this year, led the increase, along with Genesis luxury cars and Elantra compacts.
The automaker's accelerating U.S. sales have been fueled by new models with enhanced designs, improved quality and prices typically below those of competing Toyota Motor Corp. and Honda Motor Co. models. Hyundai's growth also coincides with Toyota's efforts to reassure buyers about its quality after record recalls and the yen's rise to a 15-year high against the dollar, which trims the competitiveness Japanese exporters.
Light trucks, including SUVs, crossovers, minivans and pickups, have been the fastest growing vehicles in the U.S. this year, rising 18 percent through November, while industrywide car sales grew only 5.4 percent, according to Autodata Corp.
"Cars are where our dramatic volume gains came from, but we've been underrepresented on the growth side with crossovers and SUVs," Krafcik said. To remedy that, the company is seeking ways to boost production of its Tucson and Santa Fe models and increase supply of the 7-passenger Veracruz model.
"I'm not saying we need to add incremental products, but that we've got to find a way to get some more capacity so we can sell more of those products," he said.
Hyundai rose 2.8 percent in Seoul trading to 182,500 won as of 1:17 p.m. The shares have risen 51 percent in 2010.
The company estimates the U.S. auto market will expand by 1 million units in 2011 to 12.5 million cars and light trucks, up 8.7 percent
of from about 11.5 million this year, he said.
Krafcik spoke after a briefing with reporters on the 2011 Elantra that Hyundai began selling in the U.S. late last month. The car, built at Hyundai's Montgomery, Alabama, plant for the first time, is designed to win sales from Toyota's Corolla and Honda's Civic, the top-selling U.S. small cars.
Moreover, Hyundai Engineering & Construction Co. fell the most in two weeks after Hyundai Group gave shareholders documents supporting its funding plan for buying a stake in the company, damping speculation the deal may fall apart.
South Korea's biggest construction company plunged as much as 7 percent in Seoul, the biggest intraday decline since Nov. 17. Hyundai Merchant Marine Co., Hyundai Group's largest unit, dropped as much as 7.9 percent.
Hyundai Group said today it gave shareholders selling 35 percent of the builder information showing that it didn't use shares of the construction company or other units as collateral for a loan. The documents may ease the sellers' concerns about Hyundai Group's ability to pay for the deal even as the builders' other shareholders worry about how much extra money the group will be able to invest in the company following a deal, said Kang Seung Min, an analyst at NH Investment & Securities Co.
" Investors still have doubts about how Hyundai Group will repay debts used to buy the builder without hurting the financial health of its units or Hyundai Engineering," the Seoul-based analyst said. The documents today "strengthen speculation that the deal may go through," he said.
Hyundai Group said it didn't include a copy of the 1.2 trillion won ($1 billion) loan agreement with Paris-based Natixis SA in the documents it handed over. The shareholders will review the submission before deciding what steps to take next, said Korea Exchange Bank, one of the sellers.
Hyundai Group offered about 5.5 trillion won for the controlling stake in the builder, two people familiar with the matter said on Nov. 16, the day the group was name preferred bidder. That's more than double the market price.
The bid was about 400 billion won higher than an offer made by Hyundai Motor Group, said the people. Hyundai Motor Group and Hyundai Group, once part of the same business group, made rival offers for the builder, extending a decade-long family feud.
Hyundai Engineering fell 3.7 percent to 64,700 won as of 12:22 p.m. in Seoul trading. Hyundai Merchant dropped 2.4 percent to 44,600 won.
The shareholders selling the stock said on Dec. 1 that Hyundai Group had until Dec. 7 to submit information about the loan agreement and other information showing how it will pay for the stake in the builder -Bloomberg