US Hyundai car supplies tight amid Korea labor worries

Hyundai is facing vehicle shortages in the United States after a blistering 10 percent sales increase in the first half of 2012, the company's chief executive for the US John Krafcik said Friday. But even as the company tries to step up production to defend its market share, a threatened strike at Hyundai operations in South Korea could unravel those efforts. Krafcik said Hyundai has only about a 32-day supply of cars available in the US market, the lowest in the industry, around half the level needed to keep up its 5.5 percent market share. Krafcik said Hyundai had sold more than 60,000 cars in each of the last three months and likely did it again during July. "We're literally selling cars right off the truck," he said, forecasting a total of 700,000 cars for the year despite the supply problems. But the tight supply, and difficult talks between the company's management and labor union in South Korea, puts its market share at risk. "Even though 60 percent of the vehicles Hyundai sells in the US market are built in Alabama and Georgia, a threatened strike at Hyundai operations in South America could have a major, immediate impact on US operations," said Krafcik. "We are optimistic that won't happen," he said during a press event at the Michigan International Speedway outside Ann Arbor, Michigan, where the company has a research and development center. The US capacity constraints will continue for the foreseeable future. The Korean automaker is adding a third shift at its assembly plant in Alabama, which will provide some relief. It is also beginning to build crossover vehicles at a plant in Georgia that belongs to its South Korean partner Kia. "We're pretty well tapped-out," he said. Krafcik said the company could reduce fleet sales to make sure vehicles are available for regular buyers, especially for the popular Genesis coupe, Equus and Veloster. "We're doing better than our overall market share in passenger cars," he said. Hyundai also is expanding its passenger car portfolio with new models such as the Elantra Couple, the five-door Elantra GT and the turbo version of the Veloster, which are all due in showrooms in the coming months.