Rising steel costs are causing Hyundai Motor Co. Ltd. to increase prices on U.S.-market Accent and Elantra models $200 and $300, respectively.
“We took the action because of drastically rising commodity prices, mainly steel,” a Hyundai spokesman tells Ward’s. The price increase has been in effect since July 1.
Posco Steel Corp., Korea’s biggest steel supplier, has increased sheet steel prices 63% this year, hiking the price for hot-rolled sheet three times since February to top out at a current $796 per metric ton, Posco figures show.
The Hyundai price increase is being applied at a time when both the Accent and Elantra are experiencing unprecedented market demand in the US.
Accent sales through the first six months jumped 70%, while Elantra deliveries rose 50%.
Hyundai has not yet revised its U.S. sales targets, the spokesman says, noting, “We expect to sell more than 500,000 vehicles in North America this year.”
The poor economic climate in South Korea, including record high gasoline and diesel-fuel prices, has forced Hyundai to lower its domestic sales target from 670,000 units to 630,000, he says.
However, a Kia Motors Corp. spokesman tells Ward’s Hyundai’s sister brand has boosted its 2008 domestic sales projection from 327,000 vehicles to 364,000.
“Our hot-selling Picanto minicar, called the Morning in Korea, has boosted domestic sales dramatically,” he says, adding changes in Korean regulations now qualify the car for special incentives, such as reduced parking rates and lower licensing fees.
“Coupled with this, the dramatic rise in oil and gas prices has increased demand for this fuel-efficient vehicle, which is powered by a 1.1L engine. We also expect a sales surge this fall when we begin selling our C-segment Forte, the all-new replacement car for the current Spectra/Cerato.”
Kia also plans to launch sales of the new sporty Soul cross/utility vehicle. Both of the new entries will have 1.6 L and 2.0L engine choices.
Meanwhile, Hyundai expects to be hit by another partial strike Thursday, following last week’s 2-hour work stoppage.
“We are keeping a close eye on strike action by our labor union,” the Hyundai spokesman says. “The union has announced that it will strike for four hours on Thursday on the day and evening shifts.”
The Kia spokesman says no strike action has been called by its unionized workers yet.
The Hyundai union website reports the Thursday strike is being held primarily to protest slow progress in labor negotiations with the auto maker and also because the South Korean government has announced it will prosecute union leaders responsible for calling last week’s strike.
That strike was part of an anti-U.S. beef demonstration, which is political and not sanctioned by Korean labor laws. The union leadership says if labor officials are arrested and prosecuted, it will expand Thursday’s strike.
Despite this, the Hyundai spokesman says contract negotiations are proceeding well. “We certainly hope an agreement will be signed before the end of July.”