Hyundai freezes fleet sales, pushing inventory to dealers

LAS VEGAS -- Hyundai is slashing fleet sales, increasing vehicle production and freezing dealer count as it targets another record year for U.S. retail sales.

All of which was music to the ears of Hyundai retailers during the brand's make meeting at the tail end of the NADA Show on Sunday.

"The plan is for growth," said Kevin Reilly, chairman of the Hyundai National Dealer Council and owner of Alexandria Hyundai in Virginia. "The plan is to add approximately 20 percent to production this year over last year and the dealers are very excited because they'll have more product."

Despite supply chain constraints on critical parts such as semiconductor chips, Hyundai Motor America posted record retail sales of 694,349 last year, an increase of 20 percent over 2020. Fleet sales plunged 24 percent last year, representing just 6 percent of total volume, the automaker said.

One of the measures Hyundai has implemented to keep retail sales high — and dealers happy — is to sharply reduce fleet sales and save every possible vehicle for retailers on the ground.

In fact, Hyundai sales chief Randy Parker received a round of applause from dealers assembled at the Las Vegas event when he announced a moratorium on fleet sales for the time being in response to a question, Reilly said.

"The question was about fleet, because dealers need inventory," Reilly said. "We need every single car we get. And the message from Hyundai was that they are in agreement, with zero fleet for February, zero fleet for March and zero fleet for April."

Another significant nod to dealers, Reilly said, was to essentially freeze the dealer network at just more than 800 retailers in order to push greater throughput. That also supports dealers financially at a time when Hyundai is asking them to join a facilities program known internally as Accelerate.

Hyundai said that sales growth would be focused on increasing throughput at existing dealerships, Reilly said. In others words, bigger dealerships but no additional dealer count. That has been an ongoing request by the dealer council to Hyundai management, Reilly said.

Although there wasn't much discussion of the Accelerate program at the make meeting, Reilly said that about 60 percent of the dealer body had signed up for the program by the end of last year. By the deadline this spring, that could rise to about two-thirds of the overall dealer network, he said.