Hyundai

in
Mexico
Donovan Sova | William Romero | Heidee Bacani | Michael
Andrada | Angelia Piper | Katherine Navato
History of Hyundai
● 1947 - Founded: Hyundai Group
● 1967 - Hyundai Motor Company is formed,
releases the Cortina with Ford

● 1976 - 1st Major Export: Pony

● 1986 - Enters the US market with Hyundai

Motor America
● 2005 - Hyundai Motor Manufacturing Alabama
begins first year of production

● 2017 - Hyundai begins manufacturing the

Accent in Kia’s Mexico plant
Industry

Ranked #1 in Korea
#3 in the World
● Vehicle Manufacturing
● Electric Vehicle Market
● Investments in Parts Manufacturing
● Manufacturing plants in Mexico
○ Tijuana plant built in 1995
■ Since then 3 more have been built
○ Kia’s Monterrey Plant
■ Produces the Elantra and the Kia Forte
○ Kia’s Pesqueria Plant
■ Produces the Accent and the Kia Rio
○ HL Klemove Plant in Coahuila
 SWOT Analysis : Strengths & Weaknesses

Strengths

- Low Labor Costs

- Market for smaller cars
- Reduced shipping costs
- Third largest market share in 2022 with 13.5%

Weaknesses

- Safety concerns
- Crash test determined Mexican made Accent Libby, T. (2022, November 11). Sharing insights elevates their impact. S&P Global. Retrieved March 16, 2023, from
https://www.spglobal.com/mobility/en/research-analysis/hyundai-motor-group-rises-to-3-in-us-retail-new-vehicle-market.html

more safe than Grand i10, other model sold in

Mexico (Global New Car Assessment
Programme, 2022)
SWOT Analysis: Opportunities & Threats

Opportunities

- Increase production capacity

- Tax Benefits
- Young and highly skilled workforce
- Mexico is in the top ten OECD countries

Threats

- Advertising scandals
- False fuel efficiency rating
- False safety features
- Sister company Kia also had to pay civil
penalties as a result
Problem & Solution

Problem 1: USMCA Implication

● July 2022 - USMCA replaced NAFTA
● 75% of a vehicle’s components must originate from North America
○ Up from 62.5% under NAFTA (Ljunggren, 2022)

Solution to Problem 1:
- Dispute panel ruled in favor of Canada & Mexico over a complaint regarding
the 75% regional content requirement.
- Allows Mexican manufacturers to use their own methods of calculation and
interpretations of USMCA rules when determining if a vehicle meets the 75%
regional content requirement (Scherer, 2023).
Problem & Solution

Problem 2: Chip Shortages

● Covid-19 Pandemic
● Reevaluation and prioritization: Adjust its production capacity toward high margin
models (Ben-Meir et al., 2022)
● Limit production on lower-end models

Solution to Problem 2: Diversification or localizing chip production

- Investing in nearby sources or establishing their own semiconductor factory
- Reduce risks associated with relying on foreign suppliers while still leveraging
cutting-edge technology advancements
- May be more cost-effective than dealing repeatedly with issues arising from
dependence on distant partners.
Problem & Solution

Problem 3: Declining sales for models coming out of

Mexico
- Reliant on Kia’s Manufacturing Plant
- Declining Accent Sales
- Hyundai refusing to build their own manufacturing
plant
- “Hyundai would only consider building their own manufacturing
plant if sales domestically hit 50,000 units and show signs of
steady growth” (The News Wheel, 2015).

Solution to Problem 3: Hyundai can eliminate the Accent and

introduce the Venue into their lineup
- Base MSRP difference of 54,379 MXN
- Offers more while only losing a little bit of fuel economy
- If the Venue can be built in Mexico, it could bring down
price
- Hyundai reported selling 27,000 units in the U.S. alone for
2022 Gabriel, I. (2023, January 4). Hyundai Motor Company reports
record-setting December, Q4 and 2022 ... Retrieved March 16, 2023,
References
Bekker, H. (2023, January 5). 2022 (Full Year) USA: Hyundai Motor America Car
Sales by Model. Car Sales

Statistics. https://www.best-selling-cars.com/usa/2022-full-year-usa-hyundai-motor-america-sales-by-model/#:~:text=Hyundai%20Motor%20America%20US%20Car%20Sales%20in%202022%20(Full%20Year)&text=Due%20to%20strong%20consumer%20demand

(2018,November 5). Hyundai plans to expand manufacturing operations in Nuevo Leon,state official says. MEXICONOW. Retrieved February 14, 2023, from https://mexico-now.com/hyundai-plans-to-expand-manufacturing-operations-in-nuevo-leon/
Castro, E. (2022, September 20). HL Klemove confirms construction of a new plant in
Coahuila; will be supplier of Hyundai and Kia. Invest In Mexico. Retrieved

February 20, 2023, from https://www.invest.mexicoindustry.com/en/article/hl-klemove-confirms-construction-of-a-new-plant-in-coahuila-will-be-supplier-of-hyundai-and-kia

Day, L. (2022, June 29). Crash Test

Between US and Mexican Market Hyundais Shows How Much Safer Our Cars Are. The Drive. https://www.thedrive.com/news/us-market-cars-are-far-safer-than-mexican-models-test-reveals
Douglas D. Law. (2012, November 19). Kia and

Hyundai Falsely Advertise Gas Mileage - Douglas D. Law, Esq. California Lemon Law Guide .https://californialemonlawguide.com/kia-and-hyundai-falsely-advertise-gas-mileage-relief-under-the-california-lemon-law/#:~:text=Kia%20and%20Hyundai%20Falsely%20Advertise%20Gas%20Mileage%3A

%20Relief%20Under%20the
Global News Car Assessment Program. (2022, June 28). Car2Car test demonstrates zero-star double standard on vehicle safety. Global NCAP. https://www.globalncap.org/news/car-to-car-test-demonstrates-zero-star-double-standard

Gobierno De Mexico. (2022, January). 14 Reasons to Invest in Mexico. consulmex.sre.gob.Retrieved March 6, 2023, from https://consulmex.sre.gob.mx/frankfurt/images/PROMOCION/Brochure_14_razones_para_invertir_en_Mxico_eng.pdf
Grajeda, J. (2021, October 5). Tax incentives for the Mexican auto industry encourage investment. Tecma. Retrieved March 6, 2023, from https://www.tecma.com/tax-incentives-for-the-mexican-auto-industry/

Jin, H. (2016, January 12). Exclusive: Hyundai plans to shift some small car output to Mexico next year - sources. Reuters. Retrieved February 14, 2023, from https://www.reuters.com/article/us-hyundai-motor-mexico-idUSKCN0UQ1BI20160112

Kreindler, D. (2014, June 2). Hyundai-kia to expand in Mexico. thetruthaboutcars.com. Retrieved March 6, 2023, from https://www.thetruthaboutcars.com/2014/06/hyundai-kia-to-expand-in-mexico/

Lara, I. (2022, January 10). Tax incentives in Mexico for the auto industry. Made In Mexico. Retrieved March 6, 2023, from https://www.madeinmexicoinc.com/tax-incentives-in-mexico/#:~:text=In%20Mexico%2C%20a%2025%25%20income,30%25%20credit%20for%20R%26D%20projects

Lourdes, M. D., & Álvarez, M. (2021). Impact of the United States-Mexico-Canada (USMCA)

free-trade agreement on the automotive sector in Mexico. Norteamérica, 16(2). https://doi.org/10.22201/cisan.24487228e.2021.2.489

Ochoa, M. (2021, March 4). Hyundai joins Auto Manufacturers in Mexico. Tecma. Retrieved

February 14, 2023, from https://www.tecma.com/hyundai-joins-auto-manufacturers-mexico/

S&P GLOBAL. (2022, July 28). Hyundai

Motor Group Rises to #3 in US retail new vehicle market. S&P Global. https://www.spglobal.com/mobility/en/research-analysis/hyundai-motor-group-rises-to-3-in-us-retail-new-vehicle-market.html
Singh, S. (2020, November 19). Hyundai Car

Owner Sues Company Over False Ad About Safety Features. RushLane; RushLane. https://www.rushlane.com/hyundai-false-ad-safety-features-12383854.html https://www.guideautoweb.com/en/articles/65373/one-million-hyundai-kia-vehicles-now-on-backorder/

Shepardson, D. (2020, November 27). Hyundai, Kia agree to $210 million U.S. Auto Safety Civil Penalty. Reuters.Retrieved March 7, 2023, from https://www.reuters.com/article/us-usa-recalls-hyundai-kia-idUSKBN28725X

The News Wheel. (2015, April 17). Hyundai

solving production limit problem by adding Mexico factory. The News Wheel.

Retrieved March 8, 2023, from https://thenewswheel.com/hyundai-solving-production-limit-problem-by-adding-mexico-factory/