Hyundai U.S. Chief Says Company on Track to Meet Target

Hyundai Motor Co. (005380) is “on track” to see sales rise 4.4 percent to 734,000 vehicles in the U.S. this year, even as factory capacity constraints have limited the automaker’s sales growth to just 1.2 percent in the first half, the carmaker’s U.S. chief said.

“Our year is going well if you measure it by, ‘Are you selling everything you can build?’” John Krafcik, chief executive officer of Hyundai Motor America, said yesterday at a briefing in Ann Arbor, Michigan on the automaker’s 2014 Equus sedan. “It’s a sign that we don’t have enough capacity. We frequently can’t meet the demand for a specific model.”

Hyundai is forecasting its slowest U.S. sales growth in five years after a 13-year streak in which it combined with affiliate Kia Motors Corp. (000270) to gain U.S. market share. The Seoul-based companies have trailed industrywide sales growth in every month since September, constrained by plant capacity and battling more competitive U.S.-based automakers.

Hyundai and Kia together sold 638,361 cars and utility vehicles this year through June, a 1.1 percent decline, according to researcher Autodata Corp. Industrywide deliveries rose 7.7 percent.

Hyundai’s U.S. sales will accelerate in the second half because it will boost production slightly, Krafcik said yesterday.

“Just the way the car flow goes, we’ll get a little bit more in the second half,” Krafcik said.

Quality Push

Chung Mong Koo, chairman of Hyundai and Kia, is emphasizing a push to improve quality over adding to their North American manufacturing capacity. That has tested the automakers’ ability to build enough vehicles to keep up with demand in a U.S. auto market on pace to exceed 15 million sales this year for the first time since 2007.

Hyundai doesn’t rule out building a factory, though there are no plans to do so yet, Krafcik said yesterday.

“We’ve taken a couple year pause on adding incremental capacity,” the executive said. “I can’t say when that pause is going to end.”

Krafcik provided the 734,000 target for Hyundai deliveries in March. That would be the smallest annual gain since 2008, when Hyundai sales fell 14 percent amid an industrywide plunge of 18 percent, according to Woodcliff Lake, New Jersey-based Autodata.

To contact the reporter on this story: Keith Naughton in Ann Arbor, Michigan at knaughton3@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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