As Detroit’s auto manufacturers canceled production last month because of the coronavirus pandemic, South Korea’s Hyundai cranked up its factories back home to ship automobiles to the U.S., a transfer that is proving expensive for the world’s fifth-largest auto organization.
Hyundai ramped up domestic manufacturing to up to 98% of capacity by late March, not only because the Korean market was recovering from a bad February but also as a result of its bet on demand for Tucson SUVs and other models from U.S. prospects, its largest abroad market outside of China.
While Hyundai is certainly one of few global auto manufacturers whose production has recovered at home, its export optimism has been hampered by the severity of the U.S. pandemic, weak consumer sentiment, and as competitors have rapidly moved to guard their turf.
Consignments of autos shipped from South Korea are now sitting in U.S. ports, with dealers slow to take deliveries due to slumping sales and growing inventory, said four people with knowledge of the matter.
The company idled a Tucson manufacturing line at home last week for five days, while sister agency Kia Motors is looking to shut three Korean factories for a week. And analysts now expect a sharp plunge in first-quarter operating revenue when it reports outcomes on Thursday, and some even estimate a second-quarter loss.