Exclusive: Hyundai Motor delays new Tucson mass production after strike, bets on new models for Q4 rebound

Hyundai Motor delayed the mass production schedule for its new Tucson beyond its original timeline due to a labor union strike that stretched through July and August, it has been confirmed. With the strike's fallout expected to weigh on third-quarter sales following a second-quarter slowdown, Hyundai Motor is pushing hard to reverse its fortunes through a wave of new model launches in the fourth quarter.

According to a written response Hyundai Motor submitted to the office of People Power Party lawmaker Kim Sung-won, chair of the National Assembly's Industry, Trade, Resources, SMEs and Startups Committee, the company said "the mass production plan for The All-New Tucson (NX5) has been delayed" in response to questions about new model launch delays and related losses caused by the strike. Industry sources said Hyundai Motor had originally planned to unveil the fifth-generation Tucson — its first full model change in six years — as early as August, but the strike pushed back the new car's public debut by about a month.

According to the written response, Hyundai Motor's union staged 15 days of strikes totaling 120 hours — combining day and night shifts — from July 13 to Aug. 21 during this year's wage negotiations. Including overtime refusals, the total reached 22 days and 232 hours. On Aug. 21, workers launched a full-day strike of eight hours each on the day and night shifts — the union's first all-out strike in a decade.

Securities analysts and industry sources estimate the strike caused production disruptions of about 55,000 vehicles. Hyundai Motor declined to disclose the scale of production losses, saying that making such figures public "could have a negative impact on labor-management relations, including future negotiations."

Actual sales figures reflect the damage. Hyundai Motor's cumulative domestic sales from January through September came to 448,181 vehicles, down 16.3 percent from the same period last year — the lowest level since 2008 (440,763 units), even including the COVID-19 period. Global sales fell 7.0 percent to 2.89 million vehicles, the weakest showing since 2010, excluding the pandemic year of 2020.

Industry observers point to the strike as the primary cause of the sales slump. Hyundai Motor President and CEO Jose Munoz made a similar assessment at a press briefing for The All-New Tucson world premiere in New York this month. He said that while there were "various external factors — tariffs, changes to the Inflation Reduction Act, the war in Ukraine, geopolitical issues in the Middle East, and competition from Chinese automakers — the most direct problem for this year's earnings was that we could not produce as many vehicles as we wanted to sell."

Securities firms expect operating profit to fall in the third quarter. NH Investment & Securities forecast a 5.3 percent year-on-year decline to 2.4 trillion won ($1.77 billion), Heungkuk Securities projected a 2.3 percent drop to 2.48 trillion won, and Shinyoung Securities estimated a 7 percent decrease to 2.36 trillion won. Shinyoung Securities added that the factory utilization rate at Hyundai Motor's consolidated subsidiaries — 92 percent last year and 88 percent in the first half of this year — likely fell to the low-80 percent range in the third quarter.

Hyundai Motor is counting on fourth-quarter new model launches to reverse its sales slide. The company plans to release the new Tucson and the Genesis GV80 Hybrid in the domestic market this month, with the Genesis GV90 — a flagship electrified large SUV — also set to debut before year's end. In the United States, Hyundai Motor's largest global market, the new Avante and Tucson are scheduled to launch next year.

The company is placing particular emphasis on driving new Tucson sales. The Tucson is Hyundai Motor's flagship SUV, with cumulative global sales surpassing 11.1 million units. The United States, where margins are highest, is its biggest market, and hybrid model sales have been climbing sharply — Tucson hybrid sales grew 67 percent over the past six months and now account for 28 percent of total Tucson sales.

Munoz expressed confidence in the model's prospects, saying the company plans to split production across three global hubs — factories in South Korea, the United States and the Czech Republic — "to meet surging demand for the new Tucson," adding that "the sky is literally the limit" for new Tucson sales. The new Tucson is expected to sustain its growth momentum in global markets with an enlarged body and a bold design that reinterprets the strength of steel in a contemporary way.

"The decline in third-quarter sales volumes is mainly attributable to reduced output caused by the strike," said Ma Geon-woo, an analyst at Heungkuk Securities. "Global hybrid retail sales themselves remain solid, but export volumes fell quarter-on-quarter due to the domestic factory strike."

Ma added that "volume expansion driven by the new model effect is expected to gain full momentum from next year," noting that the new Avante and Tucson are scheduled to launch in the US market and that Genesis hybrid and extended-range electric vehicle sales are also set to expand.