With Fewer Dealers, Hyundai Backs Off Bold Sales Goals

Hyundai Motor America is changing its strategy from struggling to meet annual sales targets to growing share in the ever-shrinking U.S. market. We cannot control the size of the pie, (but) we can control our slice of the pie, Dave Zuchowski, vice president-sales for HMA, tells Ward's. Bold U.S. sales goals set years ago by Korean parent Hyundai Motor Co. Ltd. have been badly missed, but the brand's

Hyundai Motor America is changing its strategy from struggling to meet annual sales targets to growing share in the ever-shrinking U.S. market.

“We cannot control the size of the pie, (but) we can control our slice of the pie,” Dave Zuchowski, vice president-sales for HMA, tells Ward's.

Bold U.S. sales goals set years ago by Korean parent Hyundai Motor Co. Ltd. have been badly missed, but the brand's market share has managed to climb steadily regardless.

Hyundai in 2004 laid out an ambitious plan for its U.S. subsidiary: to grow sales to 500,000 units a year by 2006 and hit 1 million by 2010. The brand delivered 401,742 vehicles in 2008, Ward's data shows.

The auto maker ended the year with a 3.0% share, more than three times 1998's 0.6%. For the first three months of 2009, Hyundai's U.S. share is at 4.4%. Its full-year market-share goal is 3.8%.

Another new tactic for Hyundai is looking at sales-per-outlet, “which is really the best indicator of a franchise's viability,” Zuchowski says. This new strategy coincides with a drop in Hyundai's U.S. dealer count.

Not all are formally closed yet, he says. Some are in bankruptcy, while others “may be voluntarily terminating.” By April, the auto maker expected to have 775 dealerships, down from 790 in January.

“If we end at around 740 stores that would not be a surprise to us,” Zuchowski says, noting some of the closings were based on Hyundai's belief it had too many dealers in certain markets.

Other store closings were because they were undercapitalized and marginally profitable, he says. “Our plight is no different than anyone else's. It's a very capital-intensive business.”

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