Hyundai in drive to lead SA passenger car market

Roy Cokayne

Hyundai Automotive South Africa is pushing ahead with its target to lead the local passenger car market within the next five years without establishing any vehicle manufacturing presence in the country.

The company had a sales target of 50 000 cars into the local market this year but will not achieve it because of constraints on product supply experienced by the Hyundai Motor Company in South Korea.

Hyundai SA marketing director Stanley Anderson said the brand had consistently been in third position in the South African car market.

He rejected assertions that its market leadership goal was unrealistic despite admitting its parent company had a global capacity problem.

However, Anderson was hopeful that Hyundai would sort out its capacity constraints and believed its target of passenger car market leadership in South Africa was realistic because Hyundai launched up to four new models each year.

Hyundai SA had strong volumes and a healthy market share in each passenger car segment it competed in, he said.

The company did not compete in only the low volume segments of luxury sedans and large sports utility vehicles, he said. This meant it was insulated from a sales slump in any one segment.

Anderson declined to comment on Hyundai SA’s car sales target for next year other than stating the company would “sell whatever we can get”. He admitted the volatility of the rand and its impact on pricing was the biggest threat to the company, particularly as it “did not have any control over it”.

He added that Hyundai Korea would produce 4 million vehicles this year and would sell them all.

“There is no build-up of stock anywhere in the world at the moment. They have reached capacity in terms of their manufacturing facilities and we have experienced a problem, especially with the supply of new vehicles.”

Anderson added that Hyundai was building a new 150 000 unit-a-year plant in Brazil and it was expanding the capacity of its plant in the Czech Republic to relieve some of the pressure on its Korean plants. However, this would still be insufficient to meet demand for its vehicles.

At this stage, Hyundai had no plans to establish a manufacturing plant in South Africa.

Also, the 50 000 unit annual production threshold in the new Automotive Production and Development Programme (APDP) made it difficult for a new entrant to establish a manufacturing facility in South Africa. The only way it would be viable was if the process involved exports into Africa as well, he said.

However, Anderson said the total sales of Hyundai in Africa this year would total only about 150 000 units by 45 distributors.

Although a need existed for a viable high volume product for Africa, a pickup was not part of Hyundai’s medium-term plans because the firm had decided to rather put its investment into alternative energy sources, such as hybrid engines and electric vehicles, Anderson added.

Hyundai would also be “very hesitant” to allow another company to manufacture vehicles on its behalf, he said in a reference to plans for a shared manufacturing plant in East London.

Hyundai’s stated goal was not to be the number one brand in the world in terms of volumes but for Hyundai to become “a modern premium brand, which is premium quality at accessible prices”, Anderson added.

Hyundai had capped production together with Kia at about 6.5 million units a year to ensure it did not lose control over quality, he concluded.