UK: Supply constraints slow Hyundai's Europe growth
The pace of Europe’s fastest-growing brand will slow dramatically this year because it cannot make enough cars.
Hyundai hit record numbers in Europe in 2012 selling 444,000 vehicles, up 10% in a market which fell some 7% and reaching a market share of 3.4%. But its two factories in the region, Nosovice in the Czech Republic and Izmit in Turkey are running at full capacity.
The two plants build 70% of all Hyundai’s sold in Europe and it’s the same story elsewhere in the world.
Tony Whitehorn, president and chief executive officer of Hyundai’s UK business, said: “We could keep growing this year but we cannot get the vehicles even from factories further afield because demand for their production is even stronger from markets such as China, India and the US.”
The South Korean carmaker is planning to expand capacity at Izmit from 125,000 vehicles a year closer to 200,000 but that will not take effect until 2014.
It currently produces left-hand-drive versions of the i10 and i20 but will take over right-hand-drive production of these models from Hyundai’s Chennai plant in India.
The slowdown this year will allow Hyundai to consolidate after four years of strong growth and to concentrate on building the brand in Europe, added Whitehorn.
“2013 will be a plateau years and it is an opportunity to invest in the brand. It is not a bad position to be in given the over capacity issues faced by other manufacturers in Europe.
“We have no legacy plants, we have two very modern and very flexible factories. Much of our sales success has been with the new ‘i’ models which have been conquesting customers from other brands. As we start to replace these models we have to concentrate on retaining customers.”
Andrew Cullis, Hyundai’s UK marketing chief, added: “We are now a mainstream brand and that is a dangerous place to be because it means we will have to work even harder on the customer experience. They now expect so much more from Hyundai.”
In terms of brand awareness, Hyundai’s star is rising. It is now the 53rd most valuable brand in the world according to Interbrand and 7th in the auto industry ahead of Audi.
“That puts us ahead of the likes of Adidas, FaceBook, Yahoo! and Starbucks, but there is still work to do,” added Cullis.
Separately, Whitehorn said that Hyundai will introduce a fuel cell version of its ix35 via a lease scheme in Europe within two years and will start limited volume production, around 10,000 a year, from 2015.
He admitted that hydrogen infrastructure remains the biggest stumbling block to the introduction of fuel cell vehicles. “We are talking to governments and fuel companies but the problem is they don’t know which way the industry is going – will it be full electric vehicles or will it be fuel cells? The industry needs to speak with one voice on this.”
Whitehorn also said that smartphone technology would be steadily introduced starting with the i30 this year which will allow owners to remotely control such things as HVAC and seating positions, locking and unlocking.