There was no doubt that new U.S. tariffs imposed in April would affect commerce in all sectors worldwide. The automotive industry, in particular, was dutifully concerned about the additional 25 percent fee increase on imports. What probably wasn’t on the bingo card was exactly what the fallout would entail and how bad it could be…for U.S. exports. At Hyundai’s only U.S. plant, the consequence was a monthly export of just 14 vehicles.
Yes, one-four. Fourteen. Total. According to the facility fact sheet, Hyundai Motor Manufacturing Alabama (HMMA) has the capacity to produce nearly 400,000 vehicles annually. Located in Montgomery, the assembly line almost reached that figure in 2013 with 399,500 units built.
However, due to a shift in strategy to prioritize U.S. sales, exports nosedived. In a chapter that might as well be titled Covid Continues, the Yonhap News Agency, South Korea’s version of the U.S.’ Associated Press, reports:
“Hyundai Motor Manufacturing Alabama (HMMA), a U.S. production unit of the South Korean automaker, exported just 14 vehicles in June, a sharp decline from 1,303 units in the same month last year and 2,386 in May, according to the data.
It marked the first time HMMA’s monthly exports fell below 100 units since April 2020, during the early stages of the COVID-19 pandemic.”
Uh, that’s a 99 percent year-over-year drop. For scale, the news agency says that HMMA exported 22,600 vehicles last year. Nevertheless, the plant continues to churn out vehicles as planned. According to AL.com, Alabama’s largest news site:
“The plant is still continuing to produce the same number of vehicles each month, according to numbers provided by Hyundai.
Through the first five months of the year, Hyundai produced 155,800 vehicles in six models — the Tuscon, Santa Fe hybrid, Santa Fe, Santa Cruz, GV70 EV and GV70.
Production totals for each month remained consistent, ranging from 27,500 in January to 32,400 in May. The overwhelming majority of those vehicles were meant for the U.S. market, which includes Puerto Rico and Guam.”
However, the 14-car export month might not just be a random blip but, rather, a small ripple of things to come. AL.com explains:
“But the effect of tariffs can be seen particularly in monthly totals produced for the Tuscon SUV. In March, 2,490 were produced for the Canadian market, with 2,311 in April. But in May, the plant only turned out 105 for Canada. For the Santa Fe SUV, the plant went from 1,356 produced for Canada in April to a total of 28 in May.”
If crossover SUV exports are tanking, is that a sign that maybe car buyers are finally shopping based on practicality and need instead of “I just don’t want a car/wagon/van/anything not ‘tall.”? Ha. Hell hasn’t frozen over just yet. For now, it seems the dropoff its more related to budgets, revenue, and possibly international consumer sentiment toward U.S. products.
To combat the tariff penalty, Hyundai has shifted production around. For example, some Tucson production transferred to Montgomery from Mexico, where the vehicle was built at the plant of corporate sibling Kia. AL.com says:
“Those effects can also be seen in production numbers in Mexico. Hyundai shipped about 2,100 units of the Tucson from there in February. That number plummeted to 522 in March and has stayed at zero since April.
The company was also reportedly moving production of Canada-bound cars, which had been made in the U.S., to the Mexico plant.”
In addition to production juggling, Hyundai is considering reverse-importing, a move that Toyota is also mulling. So, it’s likely this export problem isn’t exclusive to Hyundai and possibly affects all companies trying to ship things out. But to see such an effect just two months removed from when Washington’s new trade policies were implemented is eye-opening.
On the bright side, through May, Hyundai sales were up year-over-year with 369,578 vehicles sold. Also in May, HMMA celebrated its 20th anniversary.
Top graphic images: Hyundai Motor Manufacturing Alabama
> dutifully concerned
I see what you did there.
It’s great to have a talented new-to-Autopian voice and weekend coverage!
Winning !!!
Article says “The plant is still continuing to produce the same number of vehicles each month, according to numbers provided by Hyundai.” This is production, not sales. I don’t know if US demand exceeds supply for the mix of vehicles built in this plant; if not, dealer inventory will begin to increase.
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First of many such news reports of domestic manufacturing slowdowns, leading to other problems of course. All completely avoidable and unnecessary. Didn’t we say it was all a bad idea?
the article said production is the same just 2000 vehicles are being sold domestically instead of being exported to Canada…. that is not a ‘slowdown’ at all.
also this is just for one month it would need to continue for 3 or 4 months to even be considered a ‘trend’ time will tell.
The problem is that this is part of a larger trend – US manufacturing won’t export anymore.
Hyundai, in this case, could re-allocate production successfully. What about in future months? What plants will they choose to expand? What about other companies that would otherwise be at capacity?
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Fart of the Deal. What a surprise.
The world doesn’t want anything made in MAGA
So I’m not surprised.
So they did what makes sense to avoid unreasonable taxation. Hmm go figure.
With only 14 vehicles exported… did they follow the covid era rules and only make the $250k gold plated editions? If you only have 14 to sell, best make 700% margins on each one.
I’m having a hard time imagining a $250k gold plated Hyundai. Maybe it would be Genesis badged?
It’s called the “47 Edition” trim. It won’t allow you to use your GPS in Mexico or Canada, the radio is pre-loaded with Anti-War themes you think are patriotic, and it makes V8 noises and rolls coal with a new mode called “MAGA MODE”
so the radio plays The Village People Y.M.C.A. on continual loop
It couldn’t be–this one is actually made here.
The current tariff policy makes imports a little less competitive than they were before, but with the huge tariffs on aluminum and steel, makes manufacturing metal goods for export extremely uncompetitive. Net result is likely to be a decrease in American manufacturing.
Yep, F around and find out is generally a pretty terrible economic strategy
So much winning!
Are we tired of “winning” yet? This is not doing the US balance of trade a bit of good.
I feel like I’m missing the “so what” with this article. The article says Hyundai has shuffled around production locations to avoid tariffs but the overall output at their Alabama plant remains the same. So… what are the implications of this in terms of economic impact for the plant, Hyundai and the US? I feel like this is an important question to answer (or even just acknowledge) in any story dealing with the follow-on effects of the tariffs.
Well the issue is the tariffs were supposed to reduce the trade deficit with trading partners according to your President. Yet instead the trade deficit with Canada is actually worse as Canada is no longer buying cars made at the Alabama plant.
I can even give an example of how tariffs are making things more expensive for Americans with cars. Hyundai Ioniq 9 MSRP in Canada is $60,000 ($43,900 USD). The same car is $58,955 ($80,590CAD) in the USA. That is an incredible difference in cost to consumers. But supposedly those tariffs don’t cost American consumers more.
This is a good point – something that should have been in the article!
It’s because the whole point of the tariffs was supposed to be to reduce imports and increase exports to eliminate the foreign trade deficit, as well as increase domestic manufacturing
This is none of that – Hyundai has had this plant for 20 years and it’s still making the same amount of vehicles it always has, so no new domestic manufacturing has been created, and now it’s products are being sold entirely within the domestic market, instead of a mix of domestic sales and exports, whereas it previously had a decent export business. No exports means no contribution to offsetting imports, so its actually harming the trade deficit.
I’d argue the point the of the tariffs are to simply reduce foreign imports altogether. Have America build stuff for Americans. Exports are secondary. In that case, the monthly numbers of this Hyundai plant sort of work out, but the Q is can Americans continue to consume the products at the cost they’re being sold for?
That’s the actual effect of the tariffs, but not the stated intent of bringing manufacturing back to the US and reducing the trade deficit. You’ve correctly identified the massive flaw with this whole scheme.
No, Trump has repeatedly stated that he believes Americans deciding to enter into mutually beneficial transactions with sellers outside the United States constitutes a “subsidy” to foreign countries, therefore the tariffs are specifically intended to both stop imports AND increase exports to turn trade deficits into trade surpluses, reducing imports and exports simultaneously doesnt create a trade surplus
Well, how do you feel that American’s get to buy a Hyundai Ioniq 9 for $58,955USD while Canadians only have to pay $43,900USD for the exact same car? That is a direct cost of your tariffs. I keep hearing how financially tough things are in the States… yet the same car is $15,045 more expensive.
Another example. The Ioniq 5 is ramping up production in the USA right now. It was supposed to be exported around the world including to Canada. The 2025 Ioniq 5 in Canada was supposed to be made in the USA. Instead, Ioniq 5’s are coming from South Korea for Canada.
That American plant and the current plant is losing probably 100,000 cars production annually that would have been exported. That is thousands and thousands of American jobs that are now not going to get created. The suppliers in the USA will also be hit with lower orders which will eliminate those jobs too. That is an incredible economic loss.
But tariffs are great.
I feel like people in Mississippi, the poorest state in America, have a higher median income than Canadians.
I feel like all things being equal – and adjusted for inflation and exchange rate – Canadians already had a hell of a lot harder time buying a brand new Hyundai in Canada than Mississippians do in Mississippi.
Median income comparison between countries is difficult when they have very different social support systems, Poverty rate is a better measure of how lower income people are doing.
Mississippi poverty rate. 18%
USA poverty rate: 11.1%
Canada: 8.1%
Those are government stats that vary from country to country.
OECD poverty rates
USA: 15.1%
Canada: 10.1%
Mississippi: Over 30%. Using OECD calculations protocols
So no, Canadians are doing way, way better than the average person in Mississippi.
Then let’s talk about health care.
Canadians with health care coverage: 100%
Mississippi insurance rates
None. 10.8%
Medicare: 6.3%
Medicaid: 24.1%
The rest have some form of private insurance
There are no deductibles in Canada. Nothing to pay at all. Break a leg? Absolutely no out of pocket cost.
Open heart surgery? No out of pocket cost.
No denied coverage by an insurance company.
You cannot be denied coverage like American insurance companies the decide you have a preexisting medical issue
When you go to a hospital in an emergency they don’t look to see if you have enough coverage. They just treat.
So yeah. Canada is not Mississippi. Not even close.
You have fallen for what I call weasel statistics where one statistic on its own is used to paint a very misleading picture.
Canadian subsidized healthcare is great… if you can even get a doctor.
> “Despite the diversity of the voices that we heard from, it was clear there is so much people in Canada agreed on. They want everyone to have access to primary care,” [Dr. Tara] Kiran told CBC News. “Primary care is falling short. Far too many people don’t have access to what is the front door to the health-care system. We’re a country of have and have-nots. So many people have absolutely nothing — no access — and I think that’s shameful, actually.”
> The report found evidence of what it calls an “attachment crisis” — an estimated 22 per cent of Canadian adults (about 6.5 million people) do not have a family doctor or nurse practitioner they can see regularly.
https://www.cbc.ca/news/politics/primary-care-canada-10-000-canadians-report-1.7125990
Don’t get too deep in the weeds about the direct comparison between Mississippi and Canada. But look instead at how much more Mississippi-like Canada has become in the last decade with regard to these issues. The greatest healthcare system in the world does you no good if you literally can’t get an appointment or can’t find a doctor. And since Canadians are paying for it with their tax dollars either way, it is doubly insulting.
Hyundai has optimized their North American production to be as streamlined and efficient as possible. That is getting upended when suddenly they have to swap production. For example it is almost 1,000 miles farther to ship a car to major Canadian population centers like Toronto or Quebec from the Mexico plant vs the Alabama plant. Same with parts
So even if production values don’t change at the factory it costs Hyundai more to do business – which gets passed on to customers. (That is before the 50% tariffs on US steel and aluminum and the 25% or higher tax on imported auto parts)
So…
Hyundai reallocates monthly allocation of 2,000 U.S. built cars originally slated for export to domestic due to a shift in strategy to prioritize U.S. sales due to tariffs. No drop in production reported.
How does Hyundai get cars from Mexican plants to Canadian dealers without passing through the US and paying tariffs? Do they ship them by boat, or is there an exemption on tariffs for cargo that is just passing through?
Tariffs don’t apply to product transiting through a country. Only when being imported into a country for sale.
Thanks! I like knowing smart people!
It is actually a complicated thing to do that. I have friends at Ford and VW/Audi that are more involved with this. Traditionally cars were shipped from Mexico to a USA based distribution hub, and then to Canada and the rest of the world.
Both of those car companies are worried that handling the in transit cars in the USA distribution center could now trigger tariffs.
So now they are changing distribution to avoid the cars ever unloading/reloading in the USA. Which means less work for American workers at those US based distribution hubs as they will no longer handle any international exports. Talk about unintended consequences with these tariffs.
I understand the logistics via sea are are also affected – more shipments to Canadian ports rather than a common-offload in US ports and then transportation by rail the rest of the way.
It’s all risk avoidance, but if they manufacturers get into the swing of things in a new way: it might become the new-normal even if things swing back later.
Yeah, and Canadian Pacific-Kansas City has built themselves a seriously impressive network for all that
Was this the Hyundai plant that was engaging in child labor? I have no love lost for Hyundai.
That was a Tier 1 supplier in a rural area, apparently they accepted falsified documents from the teenagers saying they were 18. Still the fault of the employer, but sometimes sh*t happens. It wasn’t like they had conscripted kids or anything like that. Just another issue in the broader immigration crisis.
Thanks for the info. I will mostly cross that off my list for reasons I hate Hyundai.
I hope my fellow residents, including part-time Alabamian Coach/Senator Tuberville, are taking notes on the actual cost of this lapdoggery.
Tubber Tommyville isn’t a lap dog. He’s more of a butt sniffer.
Wait, you assume you can even find a butt with a map.
“Hey, I found this hole in the ground, is this the right place?”
Why? They’re all complicit in the next unavoidable economic slowdown, which invariably always leads to a wealth transfer from the middle class to the rich.