CHICAGO -- Unable to keep up with demand for crossovers in the U.S., Hyundai "absolutely" needs a new assembly plant, the brand's U.S. chief Dave Zuchowski says. But until that happens, Hyun-dai probably will gain some production from Kia's planned $1 billion plant in Monterrey, Mexico.
Though Hyundai's sibling brand is getting the plant, "the final chapter has not been written on that," Zuchowski said last week on the sidelines of Automotive News' Best Dealerships To Work For event here.
"You'll probably see some sort of shared relationship," he said, "but it's obviously on their books and their plant."
Hyundai also is "very likely" to get some additional production from Kia's plant in West Point, Ga., when the Mexico plant opens in 2016, said Zuchowski, who took over as CEO of Hyundai Motor America in December. The Georgia plant, which produces Hyundai's Santa Fe crossover in addition to Kia's Optima sedan and Sorento crossover, is at full capacity.
But the Mexico plant will allow Kia to produce about 300,000 more vehicles annually, Zuchowski said.
"Can Kia pick up 300,000 units of volume, and if so, what markets would it go to? And if not, who would they share it with?" he said. "So we haven't gone there yet. But it's obviously in discussion."
In August, Kia announced it would build a range of small cars at the Mexico plant starting in the first half of 2016. The plant is being designed to produce compact and subcompact cars and crossovers, though the company says specific models are still being considered.
Crossovers are where Hyundai needs help, Zuchowski said. Dealers are pushing for more inventory and asking whether the brand will get increased production capacity, he said.
"We are very short on all of our Santa Fe and Tucson and Santa Fe Sport vehicles where all the growth is and all the margin is for the dealers and us," he said. "So our constant message to the parent company is, we need to line up and get in sync with the growth in the American market and try to figure out a way to produce more vehicles in the hot segments."
Hyundai's U.S. sales are up 2 percent this year, but overall industry sales are up 6 percent. Hyundai's U.S. crossover sales are up 21 percent this year, but those crossovers represent just 21 percent of the brand's U.S. sales mix.
Hyundai reported a 44-day supply of its crossovers as of Oct. 1, but the supply has been as low as 37 days this year, according to the Automotive News Data Center.
Hyundai now sells around 42,000 Tucsons annually in the fast-growing compact crossover segment but could more than double that to 90,000 "without spending any more on incentives or spending any more on advertising," Zuchowski said.
A re-engineered Tucson will arrive in 2015, and "we'll have significant increases in our production volume there," he said. "And we're trying to squeeze more out of our Santa Fe production, and we're working with [Hyundai Motor Corp.] to do that."