Hyundai Expects Volume Resurgence Amid Design Adjustments
Some of Hyundai’s 3,000 team members work on a new vehicle, rolling down the line.
Last spring, on March 14, the five millionth engine produced at Hyundai Motor Manufacturing Alabama (HMMA) in Montgomery rolled off the assembly line.
The milestone event came less than a dozen years after workers made the first HMMA engine, a six-cylinder, in 2005, the year of the 1,744-acre plant’s grand opening. The Montgomery factory became Hyundai’s first U.S. manufacturing plant that year.
Today, HMMA employs about 3,000 team members and more than 700 of them work in HMMA’s two engine shops. Team members produce Theta 2.0-liter, 2.4-liter and Nu 1.8-liter four-cylinder engines that power the Sonata and Elantra sedans and Santa Fe Sport crossover utility vehicles manufactured at the plant. HMMA also ships engines to Hyundai affiliate Kia Motor Manufacturing in West Point, Georgia.
The engine shops run in 10-hour shifts five days a week. Near the end of 2017, the HMMA teams had assembled nearly 660,000 engines, says Chris Susock, HMMA’s vice president of production. But if it had been necessary, the HMMA plant could have produced more than 700,000 engines at peak capacity.
Besides the engines, HMMA team members in 2017 assembled 328,400 vehicles, which included 138,166 Sonata and 131,753 Elantra midsize sedans and 58,481 Santa Fe Sport CUVs. At full capacity, the auto assembly plant can produce as many as 399,500 vehicles annually, Susock says.
Also in 2017, one of HMMA’s auto parts suppliers, Guyoung Tech USA, a Korean company, announced its plans to invest $7.5 million to build a new plant in Montgomery. The move, officials said, would eventually bring some 130 new jobs to the area.
Despite Guyoung’s big announcement and HMMA’s engine assembly achievement, the auto assembly plant faced a few challenges in 2017.
One was a temporary slowdown in its ability to transport its vehicles while CSX railroad put in place a new system to enhance railcar movement across certain regions of the United States.
Susock says HMMA ships 65 percent of its newly assembled vehicles by railway.
“This resulted in limited availability of automotive and other dedicated railcars in the Southeast,” Susock says. “After reviewing the impacts of this change on automotive and other industries, CSX made several adjustments to their railcar allocations in our region. The service has improved significantly.”
Additionally, HMMA slowed down production of the Hyundai Sonata and Elantra sedans last year because of weak sales, Susock says.
Hyundai distributes vehicles through its sales division, Hyundai Motor America, which is based in Fountain Valley, California. Hyundai has more than 830 dealerships nationwide.
Last Nov. 1 in a press statement, Hyundai Motor America reported that the company in October had sold 53,010 units of its Hyundai and Genesis brand vehicles, a drop from 62,505 in sales made the previous year in October 2016.
Among the Hyundai brands that HMMA produces, national year-to-date sales figures by October 2017 showed the Elantra at 157,800 sold, down from 172,967 in 2016. Sales of the Sonatas had also fallen from 170,251 sold in 2016 to 115,313 in 2017.
“The overall automotive industry has seen a 10 percent reduction in sedan sales during 2017,” says Susock. “HMMA needed to adjust vehicle production to better match consumer demand.”
Consequently, HMMA reduced its business plan by more than 40,000 vehicles, says Susock.
But while the production adjustment is still in effect, he says, the plant is likely to return to its previous production levels by June 2018.
On the other hand, Susock says, Santa Fe sales were on an upswing last year.
While national year-to-date figures showed 108,679 Santa Fe vehicles sold in 2017, down from 109,609 in 2016, in October, Hyundai sold 13,024 Santa Fe Sport CUVs, up from the 11,420 sold the previous month in September 2017 and the 11,311 sold in October 2016. In the Nov. 1 statement, John Angevine, national sales director for Hyundai Motor America, expressed optimism regarding the Santa Fe CUV and the Hyundai Tucson SUV.
“The CUV growth trend for Hyundai continues as customers are able to find the right size, versatility and performance from Tucson and Santa Fe in highly competitive segments,” Angevine said. “With two months remaining in the year, our focus is on maintaining retail market share and working closely with our dealers for a strong close to 2017.”
With increased demand for Hyundai’s CUV, Susock says, “HMMA’s production of Santa Fe Sport increased from 36,176 units in 2016 to 55,789 units through November 2017.”
Susock says HMMA will continue producing the Sonata, Elantra and Santa Fe Sport. The Santa Fe and Elantra, however, will get new redesigns this year.
“During 2018, the Elantra sedan will receive minor refreshed updates for the 2019 model year,” says Susock. “The Santa Fe Sport will be completely redesigned and introduced during the spring of 2018. New features on this vehicle will not be available until revealed at an auto show in early 2018. The Sonata will not see any significant changes during 2018 since it had several changes to the exterior and interior of the vehicle in 2017.”
The Hyundai Sonata’s design changes include a new cascading front grille, restyled fascia and center stack and an updated three-spoked steering wheel wrapped in leather.
“We are proud of the plant’s successful launch of the updated 2018 model year Sonata,” says Susock. “Even though the mid-size sedan market has slowed, this model of the Sonata has been well received by car buyers and automotive media.”
The Sonata’s redesign, in fact, won the 2017 Good Design® Award from the Chicago Athenaeum: Museum of Architecture and Design and the European Centre for Architecture Art Design and Urban Studies in December.
All of the Sonata models for 2018 have standard safety features such as Blind Spot Detection with Rear-Cross Traffic Alert. They also come with Bluetooth hands-free phone systems and Android Auto and Apple CarPlay compatibilities.
Meanwhile, the Elantra sedan comes with a 2.0-liter, four-cylinder engine, projector headlights, power steering, front-wheel drive. It also has a seven-inch display audio system with a high-resolution touchscreen. Among the Elantra’s safety features are a tire-pressure monitoring system, advanced dual-front and side curtain airbags and lower anchors and tethers for child seating.
The 2018 Santa Fe comes with heated side mirrors, sliding second-row seats with cargo and area releases, under-floor storage, HD radio technology and seven-passenger seating. The SE and SE Ultimate models come with sunroofs. The Santa Fe’s safety features include a rearview camera, Downhill Brake Control, four-wheel, four-channel anti-lock braking system with electronic Brake Force Distribution and Brake Assist. The Santa Fe CUVs also has Blue Link technology that gives passengers access to Enhanced Navigation and SOS emergency service.
Susock says HMMA will not confirm its 2019 product business plan until mid-year 2018. In addition, currently there aren’t plans for a plant expansion.
Gail Allyn Short and Cary Norton are freelance contributors to Business Alabama. Both are based in Birmingham.