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SEOUL – Wonhee Lee leads Hyundai Motor Co. at a difficult time by handing over the keys. The South Korean carmaker came late in the crossover madness and has paid the price for weak sales and falling profits. But from next year, Hyundai will compete with a more complete lineup, thanks to two new crossovers.
Hyundai is also testing the waters for the possible launch of a compact pickup to create a completely new segment. At the same time, the CEO of Hyundai is planning a flash on eco-cars, which may even get next-generation semiconductor batteries in the early 2020s.
But even a giant like Hyundai does not have an easy time juggling so many projects.
Hyundai will increasingly work with partners to develop new technologies, carefully selecting the limited areas in which the automaker believes it can be a global pioneer.
Lee, 58, spoke here at the automaker's headquarters last month with Asia editor Hans Greimel on Hyundai's crossover strategy and plans for production.
Q: What does Hyundai look like? US. and Hyundai performance in it?
ON: General industrial demand in the US market will moderate rather moderately in the next few years. However, we assume that SUVs will continue to gain in importance as the car segment loses ground. Our strategy is to bring more SUVs to the US market. We plan to launch an A-segment SUV early next year and a seven-seat E-segment SUV next year.
Our business goal is to see a slight increase next year as more SUVs hit the market.
And Hyundai expects a decline in sales this year?
Law. We have a decline in total sales. However, we have actually reduced fleet volume and see a slight increase in retail sales volume. In terms of sales quality, the results on the US market have actually improved.
Does Hyundai use incentives?
Yes. Compared to the previous year, we significantly reduced the incentives. But not as much as we had planned. However, since the market is not so cheap, the capacity problem even in the US market is the big problem. With so much overcapacity, differentiation is not enough. I think a price war is inevitable. In order to maintain our sales volume, the incentives will be reduced compared to the previous year. But to some extent we have to spend.
What is Hyundai? Capacity in North America?
There are 390,000 in the United States [vehicles per year] with three layers only for Hyundai, not for Kia in Alabama.
And how much does Hyundai use?
330,000 or 340,000.
What is Hyundai planning for a compact pickup? based on the Santa Cruz concept?
We are currently developing a semi-pickup based on the next generation of Tucson. We showed the Santa Cruz model to our US customers. However, there are some requests from other regions to change this. In developing this model, we need to consider other opinions. We need a little more time.
What is the timeline?
If we consider all requests from other regions, we can probably deliver a pickup model in 2021 or 2022. The next generation of Tucson arrives [South Korean] Market 2020, the US market in 2021.
How much demand does Hyundai see?
It's a new segment so we do not have any data to give us some confidence. However, we believe we can create a new pickup truck segment in the US market. It is a derived model. We focus only on a niche. If we produce this semi-pickup truck, we have to make this model in the US factory, not in the local factory.
Has the project was greenilluminated?
No, it is not decided. Once we have made a decision, there will be a 32-month development process.
Has the revised Korea-US. Trade agreements increase pressure on Hyundai to invest in the US?
Yes. Currently we only have 390,000 [units of capacity in the U.S.] We can only make three models at our US plant. Within 390,000 production capacities, if we want to produce four or five models, we need additional investment to modify our production line. If we add pickup production in the US, we have to invest a lot of money.
Hyundai does not need more capacity?
We expect a slight decline in total US demand. Our sales target is almost unchanged for the next few years. Three or four years later, maybe we can make a specific decision. However, I believe that we do not need to expand the production capacity of our US plant.
If Hyundai adds products at the factory, what would they be?
We can add two more, an SUV and a pickup. We can produce the next generation Tucson in the USA. And the Santa Cruz pickup truck is a derivative. So maybe we can make these two models. The current three models are Elantra, Sonata and Santa Fe.
How long will this crossover and SUV boom last?
At least the next five years. Over the next five years, the oil price will stabilize at between $ 70 and $ 80 per barrel. At this price level, I believe the SUV market will grow.
What ratio of truck sales to total sales is ideal for Hyundai?
Probably 60 percent. SUV incentives are relatively small. If we increase the sales mix of SUV models in the US market to 60 percent, our profitability will also improve.
How long does it take to get there?
Maybe the next three years. We try to increase our adaptability. As the SUV market grows, we can achieve this growth. The remaining task is to shift production volumes from time to time as the market moves. Since we have a strong union, we have to get approval from our union every time we change production schedules. But now our union is very cooperative. The union and the management are on the same page.
What is the eco-car strategy of Hyundai?
Currently we have eight eco-friendly models. We plan to increase our green product range from hybrid to fuel cell EVs to 20 by 2025. Our research and development department expects that semiconductor batteries will be introduced in about five years.
I think that from 2023 to 2024, when we launch new electrified vehicles, solid-state batteries will probably be available. The number of battery cells is reduced so that the total cost is almost the same.
Hyundai was seen as a fast trailer. How is Hyundai leading now?
A fast-follower strategy has brought us great economic benefits. We can save our energy. Not only financially, but also in human resources. We try to be a pioneer in certain areas. But we do not give up our fast follower strategy. If we are a technology leader in some areas, such as fuel cell EVs, then we definitely want to be a trailblazer. But in other sectors, like hybrid vehicles or electric vehicles, why not follow a quick-follow strategy? That has brought us an economic advantage.
What is Hyundai's strategy for working with next-generation technologies?
Every company has limited resources. Our strategy is choice and concentration. I think fuel cell EVs are an area where we have to focus. Our other strategy is open innovation. We try to work with startups that are already established. We are open for everything.
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