A potential change of plans
On April 4, Hyundai announced to concerned buyers that Hyundai and Genesis vehicles would not see any price increases for the next two months to calm buyers’ concerns about President Trump’s 25% tariff on foreign auto imports and their impact on local showrooms.
However, in a new interview with Automotive News, Hyundai Motor Co. CEO Jose Muñoz maintained that other external factors are affecting the price of their cars, which can change.
Tariffs are not the only factor affecting price, says Muñoz
The current Trump administration and its heavy tariffs get much of the attention when it comes to the uncertainty surrounding the new car market; however, Hyundai CEO Jose Muñoz told AN that many dynamics are at play when it comes to maintaining the “momentum” when it comes to sales growth.
In his view, tariffs aren’t the main concern when it comes to selling cars to customers. Instead, a more pressing set of numbers has consequences for both Main Street and Wall Street.
“There are many discussions between different countries and the U.S. concerning tariffs, which will have an impact, but the most important factor impacting sales, from my point of view, is interest rates,” says Muñoz. “If the Fed lowers the rates, we will see an increase in sales, and maybe the industry will deliver solid growth.”
Hyundai and Genesis’s price guarantee programs, ‘Customer Assurance’ and ‘Genesis Cares,’ will end on June 2. In light of this, Muñoz emphasized that he “cannot guarantee” that Hyundai will “maintain the current policy,” adding that it depends on a vehicle-to-vehicle basis and that this time of year is typically when vehicles get a bit more expensive.
“Typically, by this time of the year, we see the introduction of new model years with new features, and those moments trigger price increases,” he said. “If we have to maintain competitiveness, we will. Product design, features, quality, and good advertising are the key characteristics of the business, and if you try to overdo it because of other factors not critical for the consumers, then you end up making mistakes.”
When asked if prices could rise as much as 10-15%, per analysts’ predictions, Muñoz said that MSRPs will not rise; however, he cannot guarantee that dealers will sell at those prices, adding that they will take any “opportunity to maximize the revenue of cars not impacted by tariffs.”
Hyundai CEO says building cars in America will help fight tariffs
Although consumers have been concerned about pricing, the Hyundai CEO states that its long-term plan is not to apply “tactical pricing or incentives” to combat the tariff impact but rather to invest more in localizing the production of its products. In March, the Hyundai Motor Group announced a massive $21 billion investment in U.S. manufacturing, including a $6 billion Hyundai Steel mill in Louisiana.
This commitment adds to its sizable American footprint. It operates three vehicle factories in the United States: Hyundai Motor Manufacturing Alabama in Montgomery, Alabama, Kia Autoland Georgia in West Point, Georgia, and the Hyundai Motor Group’s Metaplant outside Savannah, Georgia. Muñoz states that these plants benefit from vertical integration and a flexible supply chain that can adjust to varying production levels, which helped it weather the pandemic.
“In parallel, we are working through the supply chain. During the pandemic, we had the highest level of production, and we did it through high flexibility. We were able to change the production plans daily depending on the components that we got, particularly the chips that were in very short supply. So now we are reassessing the entire supply chain to optimize, limit, and minimize the cost so we can improve on our margins.”
Final thoughts
When I reported that Hyundai would follow other brands like Ford in committing to no MSRP adjustments until June, my biggest worry was “Well, what about after June?”
As I said before, these ‘protections’ are only a temporary band-aid on a bigger problem that can only last so long. Unfortunately, this situation leaves automakers in the middle between penny-pinching consumers and the powers inside the Beltway.
