Dealers don't want what they can't sell.
New challenges keep arising as the auto industry continues to rapidly adjust to the new normal the coronavirus pandemic has created. Automakers, such as FCA, are doing everything they can to induce sales, such as offering zero percent interest for over seven years and deferring payments for 90 days. Thing is, a majority of FCA's vehicles are built in the US or Canada. What about automakers like Hyundai where a greater number of its models are built overseas? This situation has actually turned into a dilemma for the South Korean automaker.
Reuters reports there's currently an unknown number of South Korean-built Hyundai models sitting in US ports because dealerships here are in no rush to buy them. With sales down, inventory is rising and there's simply no room for them on lots. Remember, dealerships are privately owned franchises and they have to buy new vehicles from automakers and then pay interest every month for unsold inventory.
But why is this situation happening for Hyundai? Because South Korea has largely stopped the coronavirus outbreak, its factories are back up and running. Vehicles like the Hyundai Kona EV, Veloster, and Tucson are all made in South Korea and now new examples are arriving stateside. Will these vehicles remain on the boat for the foreseeable future?
Hyundai said in a statement that it "has been maintaining a strong cooperative relationship with our dealers around the world and we will overcome this difficult time by further enhancing collaboration with our dealers… and maintain the optimal level of inventory at each step of the supply chain."
Hyundai's factory in the US, located in the state of Alabama, is home to the Hyundai Sonata, Elantra, and Santa Fe. Production has been suspended there until early next month. Hyundai's current situation is just one example of how the global supply chain remains affected by Covid-19.
Countries are recovering from it at different rates and just because some factories can restart production doesn't necessarily mean there's sufficient demand to sustain it.