Hyundai Palisade Has a Bigger Problem Than Chip Shortage
Remember the Hyundai Palisade stinky interior debacle? That was finally taken care of, we hope. And the chip shortage? Yes, that is an ongoing problem for not just the Palisade but for virtually every carmaker worldwide. But this isn’t about those issues. This is about a problem Hyundai never expected could happen; the Palisade is too popular.
Normally, this would be a good thing; actually an excellent thing. Media, as well as word of mouth, has been enormously positive. To such an extent that now Hyundai can’t keep up with demand. It sees this as a huge problem because just as it is attracting buyers over to Hyundai, it doesn’t want to lose them.
What should Hyundai do?
So, what is Hyundai to do? According to The Korean Car Blog, Hyundai can’t get its Ulsan plant in South Korea, to crank out enough Palisades. And this is the only plant that manufactures Hyundai’s SUV.
Hyundai is able to squeeze out roughly 6,000 to 7,000 Palisades for delivery to the US. But it needs more to keep up with orders. It sells roughly 9,000 each month. Hyundai has been able to do this because it has a supply already in place. But it is getting depleted rapidly.
The automaker is looking at its options as it tries to figure out how to keep up with demand. It can transfer some Palisade production to its Alabama assembly plant. Or it could relocate all Palisade production to other plants located elsewhere.
Korean labor unions have to approve any production moves
But the hitch is the Korean labor union. It must approve any production moves. Because of that, it looks like production will stay in South Korea, but at an additional plant. The union doesn’t want to see any production taken out of the country. But it goes beyond picking another domestic assembly plant.
The labor union opposes moving any Palisade production from its Ulsan plant. So company heads are trying to negotiate moving additional Palisade production to the same plant that is gearing up to produce the Staria minivan. There is room to accommodate extra production.
Hyundai sold almost 82,000 Palisade SUVs in 2020. From January to August of 2021, 56,711 Palisades have been sold. So it looks like it will exceed its 2020 sales figures. But not if it can’t keep supplies in the US up.
Palisade demand is set to increase this year over 2020
If the numbers hold, then Hyundai will need a minimum of 8,000 units per month. It is a great position to be in, but not if you end up alienating potential new customers. All we can say is if you’re looking to purchase one before the end of the year, maybe you should start shopping now.
There is always a flurry of sales toward the end of the year to take tax depreciation before the end of the year. If Hyundai can’t keep up with demand, it could run out of the SUV sooner than December. So get out there!