Hyundai to boost Palisade, Tucson output at the cost of sedans

Hyundai Motor Co. is preparing to ramp up the production of its two popular SUV models Tucson and Palisade at its South Korea-based plants to meet growing overseas demand, while downsizing the assembly lines of sedans seeing cooling interest.

The South Korean carmaker expects both the compact SUV Tucson and its flagship SUV Palisade to remain about 100,000 units a year short in terms of supply, respectively, in the medium to long term, Hyundai officials said on Thursday.

To keep up with strong demand in North America, Hyundai had considered boosting their production at its US plant in Alabama, or building a new factory in Canada.

But it shifted to transforming some production lines dedicated to sedans at its major plants in Ulsan, South Gyeongsang Province, including those for its premium brand Genesis.

Next year, it may need to bump up the production of its Tucson and Palisade models by about 60,000 units and 20,000 units, respectively, according to Hyundai officials.

“We had intended to additionally produce them overseas. But at the suggestion of our labor unions, we shifted to increasing their production at home,” said a senior Hyundai Motor executive.

TUCSON

The Tucson SUV is a best-selling model for Hyundai in the global market.

It sold 175,00 units in the US in 2022, more than three times its domestic sales of 33,000 units. It is expected to be about 12,000 units a year short in terms of supply.

Currently, Tucson is being manufactured at the second line of the fifth plant out of the five plants within Hyundai’s Ulsan manufacturing facilities.

To make an additional production of the model, Hyundai will transform the third plant to churn out some 50,000 units of the SUV annually.

The third plant is dedicated to sedans such as the compact Avante and the small sedan i30. It will halt prodction of the i30.

PALISADE

Hyundai manufactures Palisade only at home. The second Ulsan plant is designed to assemble the mid-size SUV.

It will produce an additional 30,000 units of Palisade at the first production line of the fifth plant, dedicated to the sedans under its premium brand Genesis, but left redundant due to the lack of demand.

Palisade is expected to be in short supply by up to 90,000 units a year.

PRODUCTION LINE TRANSFORMATION

Those facilities will undergo transformations during the holiday seasons of Chuseok and the Lunar New Year. Chuseok is the Korean Thanksgiving and falls on the last week of September this year.

By contrast, Hyundai has been suffering from dwindling sales of sedans. In the first half of this year, it sold 780,000 units of sedans at home, about 70% of the domestic sales of 1.16 million units of SUVs.

Poor sedan sales led to redundancies of some workers at their production lines. Transforming some idle sedan production lines into SUV assembly lines would increase job security for these workers.

But there is one hurdle left to clear. The five plants have their own labor unions and face conflicts of interest.

They are now protesting the assembly line adjustment plans aimed at boosting SUV production.

“What do you mean by producing Palisade, not a new Genesis car, at Line 1, which was said to be a Genesis-only factory?” said a fifth plant labor union official.

Write to Nan-Sae Bin and Il-Gue Kim at binthere@hankyung.com
 


Yeonhee Kim edited this article.