No Other Choice
According to industry sources on March 27, Hyundai Motor Company decided to produce the pick-up truck it is currently working on not in South Korea but in the United States with the duration of import duties on pick-up trucks exported from South Korea to the U.S. lengthened as a result of KORUS FTA renegotiation.
Hyundai initiated the development of its first pick-up truck late last year and the automaker was planning to produce the model, which is expected to be sold mainly in the U.S., in South Korea because of the capacity of Hyundai Motor Manufacturing Alabama. The manufacturing plant, which has an annual capacity of 350,000 cars and is suitable for four-model production, currently produces Sonata, Elantra and Santa Fe and Tucson is scheduled to be added next year.
Pick-up truck production in Alabama is likely to affect product quality. To maintain its quality, Hyundai needs to take one out of Alabama, but this is not easy. For example, new-generation Sonata makes its debut next year although its annual sales volume dropped from 216,936 to 131,803 between 2014 and last year, when the Elantra sales volume reached 180,000 cars.
Santa Fe cannot be removed, either. Last year, Hyundai Motor Company’s sales in the U.S. market fell more than 10% from a year earlier but the Santa Fe sales volume increased by about 2,000 units. In addition, the latest model of the vehicle makes its debut in the U.S. this year. The sales volume of Tucson, in the meantime, jumped from 47,306 to 114,735 units from 2014 to 2017. SUVs and pick-up trucks accounted for 65% of the total demand in the U.S. car market in January this year, and Hyundai is planning to increase the number of its SUVs in the market from two to eight by 2020.