South Korea’s Hyundai Motor just reported first quarter earnings slid for the fifth consecutive period, highlighting the need to increase output of sport utility vehicles in the US and China.
As such, the South Korean automaker, the fifth largest in the world when considered together with affiliate Kia Motors, has announced it was now mulling “actively” the idea of constructing another US plant to address the current capacity limits and tap demand as the second largest worldwide market continues to grow. “We continuously feel the need to expand the capacity of our U.S. factory,” commented Chief Financial Officer Lee Won-hee during the conference call announcing the company’s first three months earnings. The official also hinted that Hyundai has not decided yet which models would be produced at the future new assembly facility, though most likely it involves the sport utility segment – which is the fastest growing globally.
The global rivals are today cashing in on the new models introduced in the sport utility segment, which has now covered numerous dimensions and niches, while Hyundai has been fighting with under capacity issues and the lack of new models in the sector. The US, China and European sales of sport utes and crossovers have been partly spurred by the global oil glut, which has brought massive decreases of gasoline prices in regions where fuel pricing is not overly dependent on government taxes, such as the United States. Lee added that the South Korean automaker is also “cautiously” envisioning the idea of entering the US pickup market, a sector traditionally dominated by the US automakers (full size) and Japanese competitors (midsize).