Pedro Albarrán
Managing Director
Hyundai Motor de México
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View from the Top

Top 5 Carmaker Brings Production to Mexico

Fri, 09/01/2017 - 14:27

Q: How much did 2016’s product launches change growth projections for 2017?

A: We enjoyed growth in sales to almost 37,000 units in 2016, from approximately 25,000 sold in 2015. We could have sold many more cars as demand exceeded supply. We were not prepared for such high demand; all units in stock were sold, which is a good problem to have but a growth barrier nonetheless. We introduced two new SUV models to Mexico, the Creta and the Santa Fe, increasing our product line to six models. Both vehicles enjoyed great success and helped us reinforce the idea that Hyundai is a complete brand. We now have a balanced portfolio with three sedans and three SUVs and for 2017, we expect Creta to be our flagship model, followed by the Tucson and the Grand i10.

Our expectations for 2017 are to sell 45,000 vehicles with probably three more product launches, two sedans and an SUV. The seven-seater Santa Fe was already launched in June 2017, Accent will be available in August 2017 and we will have a final release in October 2017. This will allow us to compete in new market segments and reinforce our presence in the country. Regarding our dealership network, we closed 2016 with 50 distribution points and our goal is to open five or six more in 2017. We do not think we need many more dealerships so our goal is to consolidate the ones we already have.

Q: How do you face challenges caused by exchange-rate volatility?

A: We understand that this is how market cycles work and Hyundai has enough experience in international markets to face these challenges. We would have preferred to face something like this years from now because we are newcomers to Mexico. The dollar-peso exchange rate has been a challenge since 2016 but we managed to grow more than the industry’s average, showing the strength of the company in Mexico and worldwide.

Hyundai increased prices 6 percent in 2016, in line with industry levels. But this price adjustment barely tempered the 20-percent variation in the dollar-peso exchange rate. We absorbed much of the extra cost to protect our customer base. 

I expect to see general light vehicle sales receding slightly compared with 2016’s sales. The results in 1Q17 were positive growing 8 percent, but we are not far from reaching the cycle’s peak. Volatility in the dollar-peso exchange rate remains a concern coupled with increasing inflation rates, forcing clients to choose longer-term financing plans.

Q: What role has financing played in Hyundai’s evolution in Mexico?

A: Hyundai sold 55 percent of its total vehicles with financing through its collaboration with Bancomer and BNP Paribas. A further 15 percent of clients use their own financing solutions. Our main collaboration with Bancomer has proven effective and swift. Clients only need to present an official ID and can receive an answer on any financing plan almost immediately. Bancomer is probably the strongest bank in automotive financing and almost 55 percent of the population using any type of banking product already has a relationship with the bank. Bancomer has created specialized plans for Hyundai, making it a constructive relationship so far.

Q: What are Hyundai’s plans for production facilities in Mexico?

A: We are going to bring our Accent production to Mexico, integrating it to Kia’s plant in Pesqueria, Nuevo Leon. There is nothing confirmed in terms of production volumes or a solid date to start manufacturing but it will happen in the second half of 2017. Hyundai’s production was designed into the plans for Kia’s manufacturing site in Nuevo Leon.

Although uncertainty in the Mexico-US relationship slowed our development process, it did not impact our production plans. These decisions were taken years ago and we will not change them overnight in response to a transitory situation. If complications persist, Mexico will not feel the effects until three or four years from now but I do not see this happening.