Hyundai-Kia Product Launches Slow in 2012, But Plant Investments Rise

Highlights of the year’s major events affecting the Hyundai-Kia Group:

• Hyundai Automotive Group Chairman Chung Mong-koo says early in the year that Hyundai-Kia wants to sell a combined 7 million vehicles globally in 2012. The projected 6.1% increase from 6.6 million in 2011 is less than the 15% growth the brands saw in 2011 compared with 2010.
  
  Due to slower industry growth, Chung says Hyundai-Kia will enhance research-and-development competencies and adopt a record 14.1 trillion won ($12.2 billion) budget for the year, up 15.6% from 2011. Two-thirds of the budget is allotted to facilities upgrades and one-third to R&D, specifically for electric-vehicle and hybrid development.
   
• The two auto makers continue to see their market shares rise in the U.S. through 2011. Kia saw the largest jump of any Asia-based brand in the market, up 0.7 percentage points to a 3.8% share. Hyundai’s gain of 0.4 percentage points was good for 5.1% of the market in 2011.
  
  Both brands delivered record volumes in 2011, Hyundai with 645,691 units and Kia with 485,492, notably up 36.3% from 2010. Through October 2012, Hyundai sales will climb 8.2% and Kia deliveries will jump 17.8%.
   
• Despite a market slowdown and strained production capacity, Hyundai says it is aiming for a 700,000-unit year in the U.S. for 2012, while Kia targets 500,000.
  
  Kia has no major debuts scheduled for the year, but Hyundai launches a number of new models. These include the Azera fullsize sedan; Elantra compact coupe and hatchback; Veloster Turbo sports car; and next-generation, 2-row Santa Fe cross/utility vehicle. A 3-row variant replacing the Veracruz large CUV is due in early 2013.
   
• Volume production of the Kia Rio 5-door begins in January at Hyundai’s St. Petersburg, Russia, plant, in which Kia holds a 30% stake. The Rio is the fourth model to be built at the facility, including its Hyundai Solaris platform mate. The other vehicles are the Hyundai Accent/Verna and Kia Rio sedan.
   
• Kia’s Slovakia plant builds its 1 millionth car in January, a cee’d SW station wagon, five years after the facility’s December 2006 opening. Other models assembled there in the cee’d range, include 3- and 5-door hatchbacks and a wagon variant.
  
  The plant also builds the Kia Sportage CUV and Kia Venga multipurpose vehicle. Production of the second-generation cee’d 5-door starts in April, with the next-generation wagon to follow in late summer and the 3-door in early 2013.
   
• Hyundai debuts a range-extended electric-sports car concept, the i-oniq, at the Geneva auto show in March. The 4-seat concept uses a 1.0L 3-cyl. gasoline engine and lithium-ion battery-powered electric motor to travel 74 miles (120 km) in electric-only mode and up to 435 miles (700 km) with the gas-engine assist. The car, complete with a lounge-style interior, was designed at Hyundai-Kia’s European studio in Russelsheim, Germany.
   
• Hyundai in April establishes Hyundai Autron, a new Namyang, South Korea-based electronics subsidiary that will specialize in developing vehicle electronic-control systems, with an emphasis on designing semiconductors.
  
  Autron takes over the operations of Hyundai Carnes, a former 50/50 joint venture with supplier Continental that Hyundai has fully owned since November 2010. The auto maker says it will double Carnes’ technical staff to 400 by the end of 2012.
   
• Kia’s first rear-wheel-drive sedan, the K9, launches sale in Korea in May. Sharing a platform with the Hyundai Genesis and Equus, the K9 offers a 300-hp 3.3L or 334-hp 3.8L gasoline-direct-injected V-6 engine. The car is priced between the Genesis and Equus in Korea.
  
  Kia in July says there are no plans to sell the K9 in Europe or the U.S. Exports from Korea were to begin in the fourth quarter to Africa, the Middle East and South America. Chinese exports will launch in second-half 2013.
   
• Kia breaks ground on its third Chinese plant in June. The new facility will be located in the Yancheng Economic Development Zone of Jiangsu province, home to Kia’s two other factories that have a combined annual capacity of 430,000 units.
  
  Slated to open in second-half 2014, the new plant, part of Kia’s Dongfeng Yueda joint venture, will have installed capacity for 300,000-400,000 vehicles annually.
   
• Hyundai opens its second transmission plant in Nosovice, Czech Republic, in June, which will create 97 new jobs. The auto maker’s €70 million ($87.5 million) investment will boost annual capacity in the country to 530,000 units from 300,000.
   
• The Hyundai-Kia group is on the defensive in July after a French government official alleges the auto maker’s European sales growth is the direct result of an unfair free-trade agreement between South Korea and the European Union.
  
  A Hyundai spokesman tells WardsAuto, “Our cars are selling on their own merit,” not because of reduced tariffs on Korean models sold in Europe. Deliveries of the two brands in the region surge 10.5% and 25.5%, respectively, through August compared with year-ago, WardsAuto data shows.
   
• Hyundai and Kia have new Korean labor agreements in place by September. Their unions ratify the deals that have similar terms: an increase in monthly wages, bonuses and reduced work hours.
  
  Hyundai workers’ pay package includes two of the biggest bonuses received by a union in Korea: 350% of basic monthly salary, a 9 million won ($7,952) incentive bonus and a signing bonus of 150% of monthly salary plus 600,000 won ($530).
   
• Kia begins exports of its Grand VQ-R minivan to China in September. Combining elements of the U.S. Kia Sedona model with those of the Korean Carnival long-body minivan, the Korea-assembled VQ-R seats seven and is aimed at families and business executives. The auto maker already exports a short-body VQ-R to the market, selling just 378 units in 2011.
   
• Hyundai launches production of the HB20 compact hatchback at its first Brazilian plant, located in Piracicaba, on Sept. 20. The car, designed and developed specifically for the local market, is fitted with standard air conditioning and, offers one 3-cyl. and two 4-cyl. flex-fuel engines. Piracicaba is Hyundai’s seventh manufacturing facility outside South Korea.
   
• Kia says it will launch sales of its re-designed K3 compact in South Korea in the fall. Deliveries in other markets, including the U.S. where the car is known as the Forte, will begin in early 2013.
  
  Much of the design language of the Forte, which replaced the Spectra nameplate in the U.S. in 2009, is derived from the Optima midsize sedan, including the brand’s signature tiger-nose grille.
  
  Kia plans to introduce the Forte in the U.S. at November’s Los Angeles auto show. Meanwhile, the auto maker says it is mulling Forte production in the U.S. The car currently is imported from Korea.
   
• The U.S. Environmental Protection Agency in early November cites Hyundai-Kia for overstating the fuel economy of more than a dozen ’11 to ’13 models sold through Oct. 31. The auto makers blame new requirements in the EPA test procedures for the overstatements. Some models are dinged worse than others.
  
  The Kia Soul with a 2.0L 4-cyl. engine and 6-speed automatic transmission, for example, loses 6 mpg (2.6 km/L) highway mileage – from 34 mpg to 28 mpg (6.9-8.4 L/100 km) –  as a result of the EPA’s findings. Most models see reductions of 1-2 mpg (0.4-0.9 km/L).
  
  To compensate current and past owners, Hyundai-Kia plans to send them debit cards for the amount of money they would have saved with the higher mileage, plus a 15% inconvenience bonus.

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