Hyundai may build Canada plant if sales continue to soar

Hyundai Auto Canada Corp., which had a record year in 2009, may resume manufacturing here if sales volumes rise to a high enough level, President and Chief Executive Steve Kelleher said in an interview.

Hyundai on Tuesday reported January sales jumped 32% to 6.084 units, adding on to gains in 2009 when the company sold 103,000 vehicles in its best year ever.

Hyundai used to build cars at a plant in Bromont in Quebec. That factory was shuttered in the early 1990’s after it failed to meet expectations. The company’s only manufacturing facilities in North America now are south of the border in Alabama, with a factory being built by sister company Kia Motors Corp. in Georgia.

“In Canada, if our volumes grow to the point we could support a plant we would consider it,” Kelleher said. “We’re not there yet.”

“For manufacturers there is a real urge to grow sales and put up plants to meet that growth, but if you do it too fast you lose the focus on what got you to where you are in the first place, and that’s quality.”

Kelleher said Hyundai’s market share would need to rise to about 10-15% to make a plant viable. Most of that share would need to be in the small car segment.

“At that point I could see some serious consideration,” he said.

The January sales took the South Korean company’s market share to 7.5% from 6% in the same month a year ago, according to figures from Desrosiers Automotive Consultants.

Hyundai’s market share in Canada compares with 7% for Honda and 10.1% for Toyota. Both Japanese carmakers lost market share over the year, with Toyota’s January sales plunging following a massive vehicle recall because of a problem with accelerator pedals.

Kelleher said he expects another strong year for Hyundai in 2010 as new models come onto the market and it continues to add dealerships.

The company expects to have more than 200 dealers by the end of this year, from about 187 now. Hyundai has benefited from problems last year at General Motors Corp, which emerged from bankruptcy in July after receiving billions of dollars in aid from the U.S. and Canadian governments.

At the end of January, Hyundai will introduce an all-new Sonata sedan, with an Elantra compact model coming onto the market towards the end of the year. It will also introduce a hybrid version of the Sonata.

“For Hyundai the sales growth is sustainable,” he said, adding he’s more cautious about the market overall. For Canada he expects overall auto sales to rise between 3% and 5% this year.