Strikes, quality drive slow Hyundai Motor's US growth

The labor disputes, now resolved, at domestic plants that supply about half the cars Hyundai sells in the United States, threaten to upset the company's growth momentum, and have prompted some to wonder whether Hyundai made strategic mistakes with its measured expansion approach.

Hyundai was the only major carmaker to gain U.S. market share during the 2009 downturn, but it's now losing ground — its market share slid to 4.8 percent last month from 5.5 percent a year ago and 5.4 percent in July.

The Korean firm's U.S. sales rose only 4 percent in August from a year ago, lagging rivals as the market had its best August since before the global financial crisis.

In early trading on Wednesday, Hyundai Motor shares fell more than 4 percent — set for the biggest one-day drop in more than 3 months — to a near 6-week low, shaving more than US$2 billion off its market value. The stock, valued at just above US$51 billion as at Tuesday's close, has dropped 10 percent in 3 weeks, underperforming the benchmark KOSPI stock index, which is down 4 percent over that period.

“We've got all this momentum and if we give up some of that share now, it's going to be a lot harder to get back,” said Adam Kraushaar, president of Lester Glenn Auto Group in Toms River, New Jersey, who sits on Hyundai's U.S. dealer council.

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