DETROIT – The Hyundai brand has catapulted ahead of rivals in the U.S. sales rankings in three short years, but North America CEO Jose Muñoz says the company is in “crisis mode” as it ramps up investment to expand its domestic footprint and turbocharge U.S. growth.
Speaking Tuesday at the Automotive News Congress, Muñoz said Hyundai Motor America’s automotive operations and those of its 835 independent dealers contributed some $20.1 billion and 190,000 jobs to the U.S. economy in 2021.
And more is on the way, Muñoz said, thanks to last year’s commitment by Hyundai Motor Group Chairman Euisun Chung to invest some $12.6 billion in the U.S. by 2025.
The avalanche of investment comes as the Hyundai brand gallops up the retail standings.
Hyundai ranked No. 8 in U.S. sales in 2020 with 622,269. But it jumped to No. 5 last year, moving 724,265 vehicles. It was surpassed by only Toyota, Ford, Chevrolet and Honda.
Muñoz half-joked that such breakneck expansion still isn’t good enough.
“I’m really disappointed with the evolution. I think we should have done more and faster,” said Munoz, who also is global COO of Hyundai Motor Co. “So we are in crisis mode.”
Muñoz spoke here at the Congress shortly after dedicating a new safety test and investigation laboratory for Hyundai earlier in the day near Ann Arbor, Mich.
Muñoz highlighted the new facility, which includes an electric vehicle battery testing lab, as part Hyundai Motor America’s stepped-up investment in the U.S., where combined sales of the Hyundai and Genesis brands rose 13 percent to 570,203 vehicles through August this year.
The 2021 economic impact figure of $20.1 billion cited by Muñoz was based on a recent study of the company’s economic reach by the Center for Automotive Research.
“There is still room for improvement,” he said. “We decided to double down and increase our investments.”
Because of the increased spending in local manufacturing, about 43 percent of all Hyundai brand vehicles sold here in 2022 were made in the U.S., the company says.
For Hyundai Motor Group as a whole, including the Hyundai, Genesis and Kia brands, about 48 percent of all U.S. sales were generated from domestically assembled vehicles in 2022.
That ratio of locally made products will rapidly increase, Muñoz said earlier in the day.
Hyundai Motor Group will soon derive half its U.S. sales from domestic plants, he said. And that mix could climb to as high as 70 percent locally made by 2030, he predicted.
As for full-electric vehicles, the Hyundai Group aims to derive 100 percent of U.S. sales from local plants by then, he said. The group’s EV-dedicated Metaplant in Georgia will spur the growth.
“We are becoming an American domestic brand almost,” Muñoz said.
The Hyundai brand is enjoying early success with its two dedicated EVs — the Ioniq 5 crossover and the Ioniq 6 sedan. Its revamped second-generation Kona EV also goes on sale this year offering shoppers a more affordable option in the compact crossover segment.
But all three vehicles are currently made in South Korea.
Localization is a trend trail-blazed by Hyundai Motor Group’s rivals from Japan, which began setting up U.S. assembly plants in the 1980s, partly to alleviate trade tensions. The shift later accelerated as a way to offset losses from fluctuations in the exchange rate between the Japanese yen and the U.S. dollar. Japanese automakers, like other international players, have also ramped up local product development and assembly to better tailor their vehicles to American tastes.
In 2022, for instance, American Honda sold only 2,656 imported vehicles to U.S. customers. The balance of its U.S. volume, some 99.7 percent of its total U.S. sales, came from North American factories.
The Japan Automobile Manufacturers Association keeps a running tally of its members’ contributions to the U.S. economy and regularly publicizes the figures.
Japanese automakers plowed a cumulative investment of $60.4 billion into U.S. manufacturing from 1990 to 2022, the industry lobby group said in its 2023 report.
And Japanese carmakers supported 72,834 direct manufacturing employees last year. Including spinoff jobs, intermediate jobs and dealership jobs, JAMA reckons the group supports 2.2 million.
Toyota is Japan’s biggest manufacturing employer, supporting 28,768 factory workers last year.
Hyundai is making large EV investments in the U.S. with its $5.5 billion Metaplant, under construction near Savannah, Ga. Six battery-powered models will be built at the complex, which will have the capacity to churn out 300,000 EVs to start.
The dedicated EV factory will build vehicles for the Hyundai, Kia and Genesis brands, as well as EV batteries and eventually scale up for capacity to produce up to half a million vehicles a year.
The plant is expected to open in the fall of 2024 and employ about 8,100 people. Muñoz said the adjacent battery factory should start operating about six months later, maybe sooner.
“We want to get those plants up and running,” Muñoz said.
Hyundai Motor Group announced in May that the battery factory being built as part of the Metaplant project is a $4.3 billion joint venture with supplier LG Energy Solution. To be constructed in Bryan County, Ga., it will have enough annual capacity to produce 30 gigawatt hours of batteries, which can power 300,000 EVs annually.
The LG project will be the second new U.S. battery plant to serve Hyundai.
It follows a similar supply agreement that Hyundai inked with South Korean battery supplier SK On Co. for a $5 billion battery plant in Bartow County, Ga.
That plant will have an annual production capacity of 35 GWh and is expected to mainly supply Hyundai Motor Group auto plants in West Point, Ga., and Montgomery, Ala.
The passage of the Inflation Reduction Act, which incentivized North American EV and battery manufacturing, has opened the investment floodgates. Since the law passed, automakers and suppliers have announced more than $11 billion in EV battery investments.
Hyundai has pledged $16 billion globally through 2030 for EVs and aims to sell 3.23 million battery-powered vehicles globally by then.
Hyundai has not said which models the Metaplant will produce, but a new three-row Hyundai electric crossover called the Ioniq 7 is expected to be the first.
Muñoz has said Hyundai is still examining what models it will export from the new plant. But he told the Automotive News Congress audience that the company is considering multiple platform variations to accommodate a wide range of EV body types at the plant. The upcoming modular architecture will allow EVs to be assembled from larger building blocks, optimizing commonality, he said.
In June, Hyundai global CEO Jaehoon Chang unveiled a new EV strategy to rapidly ramp up volume, efficient manufacturing and flexible product engineering to drive down costs and fatten profit margins. Hyundai wants to achieve margins of 10 percent on the coming line of EVs that ride on this newly developed platform.
By 2030, Hyundai Motor Group expects half of its U.S. sales to be EVs.
