Latest News

Hyundai faces challenge replacing lost Middle East sales, CEO says

Hyundai's CEO said that it will be difficult for the automaker, due to manufacturing constraints, to quickly reallocate sales to other regions, and thus make up lost sales.

The CEO of Hyundai, Jose Munoz, revealed the?new?Ioniq3 EV at the Milan Design Week, in Italy. He said that the Middle East is the market with the highest margins for the South Korean carmaker, even though it does not bring "massive" profits.

Hyundai's Spanish CEO stated that the conflict in the Middle East was having an impact on the company because cars produced for this region cannot be easily redirected to other regions.

"You can't just derive cars?that are meant to be sold in one region and then sell them in another," he added, citing also different specifications and regulations?across the regions.

Hyundai is trying its best to compensate for the lost Middle East volume by reallocating vehicles to other markets. However, capacity constraints limit what it can do short-term.

He said, "I can tell you that many people are trying to get these cars." North America is one of the regions which can accommodate. There are also other regions.

Before the crisis, the world's third largest automaker was steadily expanding in the region with plans to increase sales in Gulf Countries as well as certain parts of North Africa. Munoz says that disruptions to logistics have compounded demand's impact, and recovery is dependent on the length of the conflict.

It takes a while to accomplish that. He said that it's not so immediate to reroute ships from one place to another.

Hyundai has been rolling new hybrid and electric models around the world. It is also investing heavily in manufacturing and supply chain infrastructures in Europe and America.

Hyundai's Middle East strategy includes the construction of a manufacturing plant in Saudi Arabia. This was originally planned to open during the fourth quarter this year.

"Hopefully we will be able still to open," Munoz added, adding that the timeline now depends on developments in this region. Reporting by Giulio Piolovaccari. (Editing by Jane Merriman.)

(source: Reuters)