Hyundai Motor Union Signs Its Own Death Warrant?

[guitarlix]

Hyundais have finally become more expensive than Toyotas in the U.S. market. The U.S. retail price of the 1,600 cc Hyundai Accent, known as the Verna in Korea, is US$12,565, $640 more than its rival Toyota Yaris. The direct cause is the 9 percent appreciation of the won against the dollar, which dropped from W1,008 in January to the current W922. As a result, Hyundai Motor’s sales in the U.S. market have declined for the fifth month in a row after peaking at 47,000 units in July. They plummeted to 28,000 units last month, a drop of no less than 15 percent compared to the same period last year. During the same period, Toyota’s sales rose 15.9 percent and GM’s 5.8 percent. Hyundai Motor’s market share in the U.S. dropped from around 3 percent last year to 2.4 percent this year. If the trend continues, the share will hit around 1 percent before long. Beyond that waits complete disappearance from the U.S. market.

There are only two survival techniques in the car market: outstanding quality or low price. If the price of a car is high but the quality similar to its rivals, it doesn't sell. If a poor-quality car costs more than its rivals, it disappears. That is the market rule. Hyundai’s weapon had been a lower price among cars of similar quality. That advantage has gone because of the strong won, so Hyundais are disappearing from the U.S. market.

But even in the face of that threat, the Hyundai Motor Union striked no fewer than 13 times this year. Only one of these strikes, over a pay rise in July, had anything to do with working conditions at the firm. The remaining 12 walkouts came at the behest of the Korean Confederation of Trade Unions over such things as opposing legislation on a labor relations roadmap, blocking a free trade agreement between Korea and the U.S. and opposing legislation on irregular workers. Because of the strikes, Hyundai Motor fell 115,124 units worth W15.6 trillion (US$1=W923) behind schedule.

The world car industry is a graveyard of once-great brands. Nissan, Rolls-Royce, Chrysler, Fiat, Jaguar, Land Rover, Volvo and Saab have all either been sold abroad or are breathing their last. Some economic analysts are even betting when GM and Ford will close down. The Hyundai Motor Union is hastening Hyundai Motor’s interment in the car graveyard. For how many winters thereafter will union members have to sleep rough in our streets?

http://english.chosun.com/w21data/ht...612140029.html

[guitarlix]

Related article

Korea's strong currency and costly moves to improve quality are making its cars pricier


Global carmakers have become accustomed to Hyundai Motor Co. looming large in the rearview mirror. In recent years, no other major automaker has boosted sales and quality as fast as the Korean company. But that upstart in the mirror may not be as close as it once appeared.

Hyundai has been beset by poor productivity and shrinking profits. Net earnings for the quarter ended in September plunged 47% from the same period last year, to $307 million, on revenues of $6.4 billion. Sales in the U.S. fell to 28,417 vehicles in November, their lowest level in 22 months, cutting Hyundai's U.S. share to 2.4% from a July peak of 3.2%.

Hyundai's woes have been aggravated by the strength of the Korean currency. The won has climbed 10% against the dollar this year and 8% against the Japanese yen, which makes Hyundai less competitive against the likes of Toyota, Nissan, and Honda. Although Hyundai is raising prices to compensate, the currency's strength will still lop 2.7 percentage points off margins this year, says brokerage Prudential Investment & Securities. "The strong won has changed the whole competitive situation for us," says Hyundai marketing strategist Brandon Yea.

Americans aren't ready to pay a premium for Hyundais, no matter how great the quality. In the U.S., Hyundai's entry-level Accent now costs some $600 more than the rival Toyota Yaris. And U.S. sales of the Sonata sedan, which Hyundai began building at a Montgomery (Ala.) plant last year, have been disappointing. That's in part because a Toyota Camry today runs only about $1,000 to $2,000 more than a Sonata with similar trim. Three years ago, the difference would have been twice that. "They should have priced the cars lower to give them an edge," says Michael Marceca, business manager at a Hyundai dealership in Manhattan.

Hyundai is paying the price for strategic missteps that date back nearly a decade. As the won lost half its value against the dollar in the 1997 currency crisis, it seized the chance to spend big on quality. But with the won now back to pre-crisis levels, it's clear the quality drive came at the expense of productivity. Rather than improving the way it makes cars to minimize defects à la Toyota Motor Corp., Hyundai stepped up inspections and testing. The result: It needs two-thirds more man-hours to build each car than Nissan and Toyota do.

Hyundai says it can compensate for the rising won. It expects to make half its cars overseas by 2010, up from 30% today, and is dispatching engineers to suppliers' factories to help develop less costly parts. But its Japanese rivals are no doubt relishing the chance to put a little extra distance between themselves and the fast-moving Koreans.

http://www.businessweek.com/magazine...ndex+page_news

[tgagneguam]

...As a result, Hyundai Motor’s sales in the U.S. market have declined for the fifth month in a row after peaking at 47,000 units in July. They plummeted to 28,000 units last month, a drop of no less than 15 percent compared to the same period last year...Hyundai Motor’s market share in the U.S. dropped from around 3 percent last year to 2.4 percent this year...

I'm trying to feel Hyundai's pain, but somehow it aint happening. Nonetheless, I wouldn't count Hyundai out just yet.

[LAMRONH]

Guess South Korea hasn't learned the Chinese lesson of currency manipulation.
As for the union, if they fail to learn the lessons of history, they will repeat them.
Better men than Hyundai have gone down to defeat. Usually has to do with piss poor management. Poor management in the union merely compounds the fracture.

[cfch3399]

Good it's time for some of these car companies to go under or get lost. There's too many. Without cheap prices, what's got Hyundai going for it?

[GM-Joe]

Originally Posted by LAMRONH

Guess South Korea hasn't learned the Chinese lesson of currency manipulation.

Or the Japanese in the automobile business.

[redimpss5]

OK, Buh-bye!

[mbukukanyau]

Hyundai already has factories in the US. They do not have Union constraints here like GM. They are going no where. I would be more worried about Aveo

[vsd]

Originally Posted by cfch3399

Good it's time for some of these car companies to go under or get lost. There's too many. Without cheap prices, what's got Hyundai going for it?

appearently you haven't seen any of their newer offerings. what they have going for them is just plain good cars.

[Al465]

Originally Posted by tgagneguam

I'm trying to feel Hyundai's pain, but somehow it aint happening. Nonetheless, I wouldn't count Hyundai out just yet.

If we were all as smart as the writer of this article and be able to predict so well, we would be all rich.

[tomprice]

"The world car industry is a graveyard of once-great brands. Nissan, Rolls-Royce, Chrysler, Fiat, Jaguar, Land Rover, Volvo and Saab have all either been sold abroad or are breathing their last."

I'm sorry but I find that totally incredulous and unbelieveable. Volvo is going greats guns at the moment (new S80, C30, XC60 concpt, XC90, S40/V50), Nissan is on the way back up, especially in the UK (Qashqai, 350Z, X-Trail). Rolls-Royce is financially secure and also doing very well (101EX, 100EX), under the watch of BMW, Jaguar have the new XF coming, they're scrapping the X-Type, have an Aston-beating coupé range and have a world-class luxury saloon under that trad. exterior. Fiat are most certainly the subject of the world's greatest revival (Grande Punto, Idea, Multipla, 500, Panda and of course the Bravo) and Land Rover are also doing fine (witness the new Defender, Disco 3, RR Sport, RRS Supercharged, RR Supercharged. There is one exception though - Saab. If they (or their owners) don't pick up the pieces and actually build a half-decent car, I doubt they'll be here in years to come. Which is a shame, because the brand doesn't deserve to die.

I therefore am forced to come to the conclusion that this was written by someone who'd walked in off the street into a Hyundai dealership and found that they were a) mostly crap and b)more expensive than better rivals and therefore concluded it was going to go bust after consulting his mates in the pub. Sorry, but Hyundai will always be selling cars somewhere, as will the companies listed above. (exc. possibly Saab)

[CrunkedRL]

Well other than one of the best warranties offered I don't see why people would choose a Hyundai over any of it's competitors. Their vehicles are nothing really exciting or appealing and to me they could really use more of a brand identity. I don't understand the difference between Kia and Hyundai. Is one luxury, is one brand sport, I don't get it. But I don't think this small bump in the road is going to stop them from trying to gain momentum. There are plans of a Kia plant being built in Alabama within the next 1-3 years.

[SaabKing]

Originally Posted by CrunkedRL

There are plans of a Kia plant being built in Alabama within the next 1-3 years.

They broke ground for it in west point georgia, on the bama georgia line.

[Slack]

Originally Posted by Mags

Value?

Perhaps it's different in other parts of the world, but in NA, Hyundai still offers vehicles that have more content for the same or lower price than their competitors. That, and increasing quality scores, has set them up as a viable alternative.

MF

Still, there are people who are passionate about cars and there are people who view cars as appliances. There are only so many of each type to go around. Hyundai, with the possible exception of the Tiburon, is clearly out of the passion game. That leaves appliance shoppers and a lot of them buy based on brand perception. And that is something brands like Toyota and Honda easily edge out Hyundai. I'm not counting them out, but they need to change course somehow.

[EldoFan]

Originally Posted by Mags

I hear this often and I don't know what it means to be quite honest. Hyundai offers a Sonata that can keep pace with every other midsizer in the class. Hyundai offers an Azera that has all the luxury of vehicles costing 5k more. Those are vehicles for people who are passionate about cars- midsize performance and luxury to name two things. Go down further in the ladder, and you see perfectly acceptable and relatively sporty offerings in the Accent and Elantra.

MF

Strictly from a technical aspect, the Sonata will not be able to keep pace with GM nor Ford in the very near future (once the 3.6HF and D3.5 come into widespread use), though on mainsteam four banger power, they do have an advantage.

As for the Azera, Buick can more than handle them (once they make six-speeds std and throw in the 3.6HF).....

The Tiburon is a good value for a sporty 2+2......but is falling behind the times in terms of styling and power (less than 200HP from a 2.7V6? Sad.....)