Per Bloomberg/BusinessWeek, Hyundai apparently can’t keep their 2011 Sonata sedan in the showrooms stateside and are thus experiencing capacity issues at their Montgomery, Alabama production facility:
Deliveries of the 2011 Sonata that went on sale early this year surged 57 percent in April to 18,536, surpassing Nissan Motor Co.’s Altima and General Motors Co.’s Malibu. The level may be unsustainable because the plant in Montgomery, Alabama, is the sole source for the U.S. and at capacity, said John Krafcik, chief executive officer of Hyundai’s U.S. sales unit.
“Demand is clearly above what we can supply at the Montgomery plant,” Krafcik said in a phone interview today. “We’re already doing overtime and Saturday shifts.”
Well, why don’t they bring over some Sonata’s from their huge Ulsan plant? Not that simple:
Hyundai has no plan to boost supplies with shipments from Korea because specifications differ for the U.S. version, he said. U.S. sales for Seoul-based Hyundai are off to record volume, rising 20 percent from a year earlier on demand for the Sonata and new Tucson crossover, and the Santa Fe sport-utility vehicle, the company said.
[...]
We’re working flat out to keep up,” [a spokesman] said.
Looks like their Montgomery facility is straining. There is talk of moving Santa Fe manufacturing to their Georgia based Kia plant to free up more Sonata room. It appears some workers are grumbling about too much overtime. Strange thing to complain about in this economy.
{ 28 comments… read them below or add one }
That “specifications differ” part is interesting. I’ve hard many students tell me that the steel used for exports (or I guess vehicles made in other countries) is of a much higher quality than the steel used for domestic autos.
Ladron,
A lot of Koreans think Sonatas built in America (or at least sold there) are both safer and more reliable.
They are likely more safer because the safety laws are actually more stringent in the U.S.
What would those differences be? Different bumper mounts is all I can think of. Plus, in the US, there’s cruise control as a standard feature on almost every new car. Here, it’s illegal (I believe).
Are you sure about that Wangkon? Or are you surmising? I’d like to see the real data, instead of going by what some Korean students told you. They’ll say fan death is reality too, but does that make it so?
The two types of quality, one for export and one for domestic use.. just doesn’t make any economic sense to me. That means keeping two different separate assembly lines at a time when foreign imports are rising. I think it’s an urban myth.
A simple solution to not enough cars but skyrocketing demand…
raise the price.
The Korean version of a Sonata is a much cheaper car ( not the price ), but the materials used. A typical Korean car has steel that you can literally flex. What is basic on a US Sonata is far above what is standard on the Korean car. The US warranty is 10 years, the Korean ones is probably 10 minutes. I saw an ad for the Sonata, and it has heated rear seats. In the ads, they extol the safety virtues of the Sonata. There are lots of ads for them. The Kia Soul is on TV a lot too, starting at under $ 14,000.00 Part of the attraction of Hyundai and KIA is the warranty and the price. You see ads for the Genesis for $ 29,000.00 in the US, and what is called “well equipped”.
Cruise control, while neither common nor popular in Korea, is not illegal. It can be found on all high-end luxury cars (both foreign and domestic). Recently it has even appeared on mid-level vehicles, namely KIA’s new K5. As the K5 is based on the Hyundai Sonata, I would expect the Sonata to offer cruise control in Korea very soon, probably on the next model year.
Emissions control?
Wow. You sound quite assertive there. I heard the same “urban myth” when I was living in Australia about Fords made in that country for domestic sales and those for the export market. I think that is quite normal for any product – particularly mechanical, electronics and telephonic products – that are made for both domestic and foreign consumption. The reason for this is as WangKon said: differing standards in different countries.
Take electronics, for example. Some countries require power plugs to have an earth prong; others do not. Also with mobile phones – different countries have different standards on radiation shielding. And as we all learned a couple of years ago, inspection standards for meat quality vary too.
Does this mean two totally different assembly lines? Maybe. It depends on how much is different.
Let’s see what I can Google up about cars. Wow look at this page! Sadly, I cannot block and copy/paste text because it is in Google books. But I think it goes right to the heart of your question in principle, cm, without being specific about Hyundai.
All car manufacturers who export must to some extent have “two assembly lines” because not all cars drive on the same side of the road. This means that Japanese car makers who want to send their products to Korea must make left-hand-drive vehicles, not just right-hand-drive. And vice versa.
The same would be true of emissions standards around the world – clearly not uniform at all. That means different exhaust systems for different markets.
Logically, the same would also be true for crash testing and acceptable standards of buckling/crumpling, and so on.
As you will see here even cars sold in the US are made to different standards than those sold in Canada, so that recalls in one nation may not apply in the other.
Whether that means, as I have heard, that some Korean consumers re-import (used) Hyundai automobiles sold in, say, the United States, I don’t know. That may be an urban legend. Let’s see what others can come up with. Maybe someone can take the time to Naver it in Korean.
cm:
here is a partial answer.
A Korean living in the US has bought a Sonata and would like to bring it back to Korea because it has side airbags, which Korean-made Sonatas don’t. He is asking whether there will be a problem with different parts used in repairing the car.
So while the car is essentially the same design, some things vary from market to market.
Japan did the same, my car-freak Japanese friends told me back in the 1990s. I remember them in Portland, OR scrutinizing Toyotas and their Japanese competitors in the US and bitterly saying that they were being ripped off at home. They were shocked and then immediately more receptive to the Karel Von Wolferen “revisionist” argument of the time.
Part of the Asian mercantilism package is that not only the press and opposition parties but even the consumer movements are co-opted, so you won’t get any inkling that things aren’t quite right unless you investigate everything yourself.
The need to keep rigging the system against the average Cho probably helps explain why the chaebol choose to own newspapers in an era when newspapers are not profitable.
China is pursuing this path on steroids.
Korea has been very successful in waving the flag to get Koreans to buy Korean. Do it for the Motherland. At a point in the past, it may have been very relevant. I don’t think it’s as relevant now. Samsung & Hyundai & Kia & LG have spread world-wide., and they have the Korean consumer to thank for that. There is no way they sell products overseas for the same inflated prices as domestically. Koreans seem to accept that this is the way the place operates. Just like all the bribery, it’s just the way it is. It doesn’t have to be that way, but unless someone grows a set, it will just keep being the way it is. There is no direction from the top for change. The Government hands out cash to the big boys for r & d, and other assorted things. The big boys have lots of cash of their own, but the system keeps them lubricated. It’s just the way it is. There are some groups pushing for change, but pushing upwards is very hard. And I’m not talking about all those civic organizations that are basically no better than anarchists. So many “civic groups” are just masquerading at fronts for the fellow up north. But since critical thinking is not taught / practiced in SK, they do not see the forest for the trees. There may be unhappy people in SK, and according to the suicide figures, that is very true, but they do not seem to try to fix the system, they just jump off a building, and seemingly let someone else worry about it. And re the cruise control feature on a car, knowing how Korans drive, and how utterly unaware they seem to be, you can just see some one bopping down the freeway, cruise on, TV on, and brain in neutral. Absolutely scarey.
Coming from an Alabamian, having seen this firsthand in Tuscaloosa with Mercedes…I got nothin’.
Our Volvo has cruise control, so I don’t believe that it is illegal.
Not that it’s illegal. In the U.S., cruise control is considered a standard feature, i.e., it is standard equipment on all models and is included in the MSRP sticker price. (I had a Volvo 240DL and a Toyota Prius now, and both have cc’s as a standard feature.)
However, in Korea, they’re saying that cc’s are considered an “optional” feature that is not included in the MSRP; therefore, you have to pay extra to have it.
In Australia, a land of often very hot temperatures, air conditioning is STILL an option in most vehicles! I believe power steering might still be an option too.
Anything to gouge some more money from the humble consumer.
The super high-margin add-on for automakers these days, especially Korean automakers, is the factory-installed entertainment system and GPS. Those are typically W3,000,000 and up on fancy cars.
The bad news is iPad does all that the built-in system does (iPad has GPS), save for receiving DMB television broadcasts, and starts at $499. My guess on Korea pricing for iPad is W650,000-700,000 when it is introduced here for the 16GB Wi-Fi version.
I had heard CC was illegal. Guess I was misinformed.
RE: safety features, I had never even thought about airbags being different between different productions of the same car.
RE: Importing Korean cars. A few years ago, when the Genesis first came out, there were quite a few people who re-imported it from the US. Even with shipping costs, taxes, and everything else, it was still about 6 Million cheaper than buying one here.
http://joongangdaily.joins.com/article/view.asp?aid=2894349
I wonder if cm has any response to all of the above, since he suggested that it was an urban legend that the same cars are made differently for different markets. He has been quiet.
More “problems” at Hyundai Motor’s America.
http://www.montgomeryadvertiser.com/article/20100516/BUSINESS/5150378/Hyundai-Kia-switch-not-yet-verified
Anyone here ever read “Freakonomics ” by UofChicago economic profession Steven Levitt? It’s a life changing book, particulary for people familiar with game theory.
http://en.wikipedia.org/wiki/Freakonomics
Any ways, Dr. Levitt says that people will always be driven and make decisions marked by exterior incentives. He used real world examples to illustrate his point such as sumo wrestling and elementary school teachers.
Although Dr. Levitt had no proof that cheating in sumo wrestling exists, he used economic statistical analysis to show that it probably does. Per the wiki entry on the subject:
So, what does this have to do with Hyundai and if they build better cars in the U.S. vs. Korea. The whole point of Levitt’s analysis of sumo (as well as other examples in his book) is that people tend to drift to cheating to best follow how the rules are set and enforced. Thus, let’s examine Hyundai’s motivations and the rules. As commenter DLB likes to point out often, Korea’s car market is not well penetrated by foreign automakers, thus there is a lack of competition in the market place. This is slowly changing, but Korean automakers still have a hold of +90% of the marketplace.
If you dominate the market or are at least satisfied by your market position, then you tend to create less quality products. That’s just human nature. Excellent quality descends into good enough. Hyundai needs to be excellent in the U.S. It can merely be good enough in Korea. If that’s what it needs to be, the motivation to “cheat” if you will, is high.
Again, I have no evidence for this, but the “rules” being the way they are, I wouldn’t be surprised if reality was closer to the suspicion in this case.
“I wonder if cm has any response to all of the above, since he suggested that it was an urban legend that the same cars are made differently for different markets. He has been quiet”
Sorry, I was away for couple of days. Getting back to the subject, of course there are going to be different options, and different safety specs for each different country – that’s a common sense, and this is not just Korea. What I want to know is, what evidence are there that Hyundai is putting in thinner sheet metals for instance, as it was charged, on Korean cars. It’s one thing to have different options, safety features, etc, but it’s a totally different matter when you’re putting in lower quality materials into the cars. That is the charge here, and I want to know on what basis?
“They are likely more safer because the safety laws are actually more stringent in the U.S.”
I thought they were safer in the US since American’s were driving them. Isn’t Korea’s vehicular accident rate pretty high worldwide?
cm,
I’ll admit, all my evidence is hearsay. I know Koreans who drove models in both countries and they think the Korean cars in the U.S. are better.
I wonder if there are any non-profit consumer protection organizations in Korea that might have some hard data? Did Korea ever have its own Ralph Nader?
WangKon: thanks for the Game Theory/Freakonomics argument. That’s good stuff and food for thought.
cm: in answer to your question, no I don’t have any specific charges or data about Korea using thinner metal in Korean-made cars, but I think the argument brought up by WangKon above seems to show that logically they would be. Why? because they can – less competition, for starts, and less psychologicall barriers to consumers buying them.
#23: That reminds me of a term I learned in the Silicon Valley 10 years ago: DWA. As in while slooooowly exiting the 101 saying, “Looks like we have a DWA ahead of us.”
@23, I think it depends on how you look at things. You could call America a violent country because there are so many guns there, but if you also consider how many guns there are to how few people get shot, it might be tempting to conclude that it isn’t really that violent after all.
The same thing goes with Korea. I’m often terrified while riding in a car in Korea, because sometimes people use whole lanes of traffic as parking areas, stop signs don’t exist, and tiny streets are never designated as being “one way,” and if they are, people often ignore the rules. With all of these things in mind, I am often shocked by the fact that I have survived for so long, and that people generally consider driving, taking a bus, or a taxi to be a somewhat safe mode of travel.
@3gyupsal
You make a good point. That fits into my general perspective that Korea is a land of amazing contradictions.
Another one: we often see Korea as a 빨리빨리/대충대충 land where people try to work around the rules. The 삼풍 department store tragedy (and crime) was a good example of that. And yet fewer buildings than one might collapse due to sub-standard concrete, poor design, etc, actually do.
We often see Koreans as fly-off-the-handle, over-emotional people often into mob mentality (look at the beef protests) and yet it is in peaceful Thailand where protestors are now being shot on the streets with live ammunition.
It’s never boring here, and always full of surprises.
(I still like to buckle my safety belt in the back seat of a taxi, though.)
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