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2004 Record Year for Auto Sales

Decision needed on whether to eliminate the excise tax of 2002


March 17, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

Carrying on the momentum

After a record-breaking 2004, the local auto industry is betting on a mix of exciting new products to keep the market strong with sales of 127,000 new units in 2005

The local auto industry expects to follow its most competitive, record sales year, which debuted an exhilarating number of redesigned and new models, by carrying on last year’s sales momentum with yet another batch of new and exciting models to be unveiled at local dealerships in the coming months.

Last year’s total 134,391 new units sold, up 9.4% from 2003, was an all-time record for the highly competitive local auto market. However, local industry sources interviewed by CARIBBEAN BUSINESS see the market cooling off and returning to earlier sales levels, this time closer to 127,000–some 7,400 fewer units than 2004.

Reaching 127,000 in unit sales in 2005 would mean a seventh consecutive strong year for the local auto industry. Last year was the sixth year above the 122,000-sales-mark for the industry since it peaked at 128,813 units in 1998.

Of course, nobody wants to wind up on the receiving end of the anticipated 7,000-unit sales loss. In fact, auto distributors’ usual competition to be the front-runners in sales is expected to turn into an asphalt-melting run for the money and market share this year with more new or redesigned models and high-powered marketing efforts.

Keeping what worked

"Last year [2004] was really exceptional for the industry in the number of cars sold, due in part to low interest rates, plus an improved economy both here and in the mainland U.S.," said Steve Randall, regional manager of Ford and Lincoln Mercury operations in Puerto Rico and the U.S. Virgin Islands (USVI). "The manufacturers were also very aggressive with their rebate programs," he added.

Consumers will be happy to know the 2005 parade of new models will be accompanied by relatively low interest rates, special financing deals, and the manufacturers’ rebates that played a key role in helping the local auto market achieve last year’s record-breaking sales total.

Auto sales were hot throughout 2004, surpassing the local industry’s monthly 10,000-unit average from January through May and again in August, then going beyond 11,000 units in June and July and again from October through December. The exception was September, when auto sales slumped after Tropical Storm Jeanne tore through the island.

Another car parade year

Toyota will be playing it safe in 2005, despite last year achieving a combined sale of 37,713 units–of Toyota, Lexus, and Scion vehicles–a 22% increase over 2003 figures. Despite the noteworthy growth, local distributor Toyota de Puerto Rico (TDPR) sill sees room for retaining its market leadership, although its representatives agree with the prediction that overall sales will drop somewhat this year.

Last July, the Japanese automaker introduced its new Scion line with great success. The new brand, with three distinctive models, is aimed at Generation Y (young adults ages 18 to 27). With all three brands combined, the Japanese automaker enjoys a sizeable 28.1% market share in Puerto Rico. The Toyota brand alone captured 25.9% of the local market.

Toyota had a banner year in 2004, selling a record 34,810 units, up 15.4% from 2003. Its luxury division, Lexus, sold 849 units in 2004, up 1% from the previous year. Meanwhile, Scion sold 2,054 units during its first six months in Puerto Rico. Toyota has 25 authorized dealers in Puerto Rico and the USVI. Lexus has one dealer and Scion six on the island.

"For 2005, we are projecting to sell close to 38,500 units of the three brands, 32,640 of Toyota, 860 of Lexus, and 5,000 of Scion," TDPR President Mario Dávila said. "As for the entire industry, we are projecting auto sales of 126,000 to 127,000 units, below the 2004 total." TDPR’s sales projections for both Toyota brands and the entire market for 2005 are not higher than last year’s based on market research, said Dávila, who became TDPR president in 2002. "It isn’t that we want to be conservative. What we do is look at our sources and use their numbers, and usually their numbers are pretty accurate," he added.

Dávila said the Japanese automaker plans to launch a totally redesigned Toyota Avalon sedan and a re-engineered Lexus LX 470 Sport Utility Vehicle (SUV), as well as two new SUV hybrids: the Toyota Highlander and the Lexus RX 400h later this year. The goal for the world’s No. 2 automaker is to eventually offer hybrid versions of all of its gasoline-powered vehicles.

Ford expects a great year

Last year, Ford and the American company’s Lincoln and Mercury divisions sold 14,244 vehicles in Puerto Rico, 2.5% fewer than in 2003. Still, the U.S. automaker holds the No. 2 position in overall unit sales. Its 10 authorized dealerships on the island help Ford attain a 10.6% share of the local market.

Randall conceded Ford’s sales aren’t as high, but insisted they are improving, revealing retail business was substantially high in January–"the best retail month we have had in Puerto Rico since October 2003," he said. "Our sales were down in total volume last year, but our retail business was up," he disclosed. "Basically, we did a little less fleet business with the government in 2004 vs. 2003. Nevertheless, we had a very good fourth quarter."

With the opening of a new dealership in Carolina and the launching of three new vehicles in 2005, Ford expects to carry on the momentum attained last year, when it rolled out six new Ford and Mercury vehicles. These include the Ford Five Hundred, Freestyle, all-new Mustang GT, and the Mercury Montego and Mariner SUV.

"The Five Hundred, the Freestyle, and the new Mustang are zooming out of showrooms. I’m having trouble getting enough Mustangs, because the demand is so high," said Randall, who was appointed Ford’s local regional manager last year. "These products have been well received by consumers, but we still need more exposure, and to be more aggressive in the media."

In 2005, Ford will once again launch new vehicles, Randall said. The U.S. automaker has four new cars coming up, the Ford Fusion, Mercury Milan, Lincoln Zephyr, and the new Mustang convertible, which arrives this summer. Randall expects these vehicles, along with the opening of Alberic Ford in Carolina, will help Ford attain double-digit sales growth this year.

Despite being the truck leader in Puerto Rico, with 122,000 vehicles sold over the past decade, of which the automaker is very proud, Randall said launching the three new cars this year proves the automaker is very serious about this segment as well.

Randall pointed to the fact that, for the first time since 2001, Ford has 14 models on Consumer Reports’ "Best Buy" list, a claim the company couldn’t make five years ago. "Our quality performance by J.D. Power is 22% higher than in 2001; we are making some serious investments and real progress in quality, and that’s not us saying it, but the media and the consumers out there," added the Ford executive. He, too, predicted the local industry’s total sales for this year will be about 127,000 units.

Suzuki is upbeats

For the third consecutive year, Japanese automaker Suzuki and its local distributor, Suzuki del Caribe, captured third place among the best-selling brands in Puerto Rico last year with 12,743 units sold, a 6.7% jump from 2003.

Suzuki’s best-seller last year was the Aerio with 6,114 units sold, followed by the Grand Vitara with 3,392, and the XL-7 with 2,010 units, reporting sales increases of 11%, 49%, and 10%, respectively, over 2003. The fact the local distributor had only three Suzuki models available in 2004 makes its third-place finish even more significant, said John Bowen, Suzuki del Caribe general manager.

"The industry’s sales projection for 2005 is very encouraging, given we just expanded our market options on the island with the introduction of the Forenza in January," Bowen said. His 2005 industry forecast: "Sales of 14,800 for Suzuki, and 127,000 units for the entire industry."

Suzuki del Caribe’s general manager added the Forenza solidifies the automaker’s family in Puerto Rico by offering a fully equipped car with luxurious standard features at an accessible price. Later this year, Suzuki will introduce two more new models into the local market, the Verona and the Reno, bringing its total number of available models to six.

Suzuki has 20 authorized dealers throughout the island and 9.48% market share. Talks are underway for the possible establishment of a new dealership in Humacao, Bowen disclosed. He is optimistic Suzuki will increase sales and market share this year. "We anticipate the Forenza, Verona, and Reno will help increase our sales volume. New models always attract consumers to showrooms, and stimulate them to make changes," he said.

Mitsubishi is on a roll

Mitsubishi Motor Sales of Caribbean (MMSC) closed 2004 with 11,743 units sold, up 13.2% from 2003, driving off with an 8.78% market share. Mitsubishi and Toyota were the only two top-selling auto brands on the island to increase market share in 2004, President and CEO Eduardo Mayoral disclosed. Mitsubishi was the No. 1-selling brand in Puerto Rico in the late ‘80s and early ‘90s.

Mayoral attributed Mitsubishi’s increase in unit sales and market share last year to improved customer service, extended product warranty, and the introduction of new models. "In just two years, Mitsubishi has introduced seven new models in Puerto Rico, including the Outlander compact SUV, which achieved first place in sales in its category six months after it was launched, becoming the best-selling SUV in Puerto Rico in 2004," said Mayoral, who took over at MMSC in January 2002. Mitsubishi also introduced the Endeavor SUV, Lancer Evolution VIII, and the redesigned Galant. In 2004, Galant, Endeavor, Lancer, Montero, and Outlander experienced sales increases of 154%, 34%, 19%, 14%, and 10%, respectively, compared to 2003, Mayoral said.

Last year MMSC celebrated the 20th anniversary of the Mitsubishi Montero SUV, inaugurated a new customer service, and a 24-hour telephone system, and extended its vehicles’ bumper-to-bumper warranty to five years / 60,000 miles and on the power train to 10 years / 100,000 miles. "Mitsubishi offers the best warranty available on the market, with which we provide our clients at no additional cost," said Mayoral. There are 27 authorized Mitsubishi dealers islandwide.

"Mitsubishi will launch two new 2006 models this year, which we expect will raise volume and optimize market segmentation for our brand," Mayoral added. The new models are the completely redesigned Eclipse, scheduled to arrive at local dealerships in June, and the all-new Raider pickup truck in October. The MMSC executive projected Mitsubishi sales will increase this year by 6% to 12,500 units while the overall market will decline 5% from 2004.

General Motors aggressive in 2005

Last year, General Motors (GM) divisions Chevrolet, Buick, Pontiac, Cadillac, and GMC sold a combined total of 9,737 vehicles in Puerto Rico, up 2.9% from 2003. GM zone manager for Puerto Rico, the USVI and South Florida, Ricardo La Costa credits the upswing in sales to two main factors: the arrival of new products during the second half of the year and a more aggressive marketing campaign involving special financing offers. Overall, GM enjoys a 7.25% market share in Puerto Rico.

"In 2004 we launched two new Chevrolets, the Equinox SUV and the Aveo, which have been very well accepted by local consumers, plus we introduced our loyalty campaign," La Costa said. The Equinox arrived in late July and the Aveo in October, which is the beginning of the company’s model year.

Between Oct. 1, 2004, and Jan. 31, 2005, sales of GM vehicles increased 16% from the same period in 2003, La Costa revealed, adding January sales reached 1,024 vehicles, 77% higher than in January 2004. "The momentum we’re carrying [in 2005] is incredible." GM has seven authorized dealerships in Puerto Rico.

La Costa described the Aveo as "a perfect car for Puerto Rico, which we sell locally starting at $10,999, with a great warranty." Chevrolet didn’t have an entry-level vehicle in the local market’s small car segment, and the Aveo has successfully filled the sales gap, selling 313 units in the last quarter of 2004. "We could have sold many more, but we just ran out of them, and the same happened with the Equinox, which means the best is yet to come," the GM executive said.

La Costa revealed GM has recently launched a new promotional campaign offering 0% interest with no residual value applicable to all its SUVs and pickup trucks, such as the Envoy, Trailblazer, Suburban, Buick Ranier, Denai, Tahoe, and GMC Canyon.

As for new models, La Costa said GM has just launched the 2005 Pontiac G6 coupe, and its convertible version is slated to arrive by year’s end. Pontiac will bring out its all-new Solstice roadster by the summer and a redesigned Pontiac GTO, now with 400 horsepower, hood scoops, and a new rear look. It will also introduce the V performance series of the Cadillac CTS, XLR, and STS; redesigned Chevrolet Monte Carlo and Impala; the new Corvette and the all-new Z06 version with 500 horsepower; as well as the all-new Chevrolet Cobalt and the supercharged version Cobalt S with 205 horsepower.

"After what happened in 2004, we expect a good year for the local auto industry and a great year for GM vehicles in 2005," La Costa predicted. He proudly pointed out local GM dealerships sales representatives have been scoring as well as, and in some cases even better than, their stateside counterparts during factory trainings.

Growth opportunities for Nissan / Infiniti / Kia / Saab

José Ordeix, vice president and general manager for local Nissan, Infiniti, Kia, and Saab distributor Motorambar, sees growth opportunities in 2005 for the four brands. Nissan and Kia have each 19 authorized full-service dealerships on the island. Infiniti and Saab each have one.

"Although we realize this year’s [2005] local auto sales market won’t be a repeat of last year’s, we feel very positive, projecting total sales of 126,000 to 127,000 units for Puerto Rico this year," Ordeix said, adding "we are satisfied with the performance of our brands as we see great opportunities for them this year."

Regarding Nissan, Ordeix is very pleased with the brand’s continuous growth, which sold 9,198 vehicles in 2004, up 9.1% from 2003, and enjoys a 6.84% market share. "We started 2005 solidifying sales of the new Pathfinder SUV, launched in November, and complemented it with the arrival of the new Frontier pickup truck in February, and the X-terra SUV in March," Ordeix said. Nissan’s luxury division, Infiniti, was third in sales among Japanese luxury vehicles in Puerto Rico last year, selling 331 units, down 24.9% from the previous year.

"We began construction of our new Infiniti service center, which will help us satisfy the expectations of present and future Infiniti customers," said the Motorambar executive. This year, Infiniti will launch new versions of the M45 and M35 sedans, slated to arrive in late March or early April.

As for Kia, Ordeix said the Korean brand continues to experience stable growth, which he said reaffirms that the brand is here to stay. Last year, Kia sold 5,126 vehicles, increasing 0.5% from the previous year. The Korean automaker has 3.81% of the Puerto Rico market. Kia has just launched a new version of its Sportage compact SUV, and will introduce the new Rio sedan this summer. Ordeix affirmed the new vehicles will further contribute to the Korean brand’s sales in Puerto Rico.

Despite Saab’s poor sales in Puerto Rico, with four and three units sold in 2003 and 2004, respectively, Ordeix said Motorambar is in the process of reorganizing the brand’s marketing in Puerto Rico and will launch two new models, the 9-2 wagon and the 97x SUV, later this year.

As for opening new dealerships for its four brands, Ordeix said Motorambar would first concentrate on improving the existing dealership network. "Our priority is to strengthen the operations at our point of sale [showroom] facilities, to turn them into full-service dealership centers that provide sales, parts, and service, to satisfy the expectations and demands of our customers," Ordeix said. Nissan has 23 points of sale in Puerto Rico, while Kia has 22.

Chrysler continues its product offensive

Even though Chrysler Group (Chrysler, Dodge, and Jeep) had the biggest product launch in its history in 2004, with the introduction of 11 new vehicles, and the return of the legendary Hemi engine and rear-wheel-drive vehicles, the automaker’s product offensive is by no means over, said David Elmore, regional marketing manager for Chrysler International Services S.A. (Cissa), which handles sales and marketing for the U.S. automaker in Puerto Rico, the Caribbean, and Central America.

Chrysler sold 8,987 units in Puerto Rico in 2004, a 13% sales increase over its previous year’s sales, nabbing a 6.69% market share. Elmore said vehicles launched last year are still having an effect on this year’s sales. "We expect to sustain momentum created by the 11 new vehicles launched in Puerto Rico last year for Chrysler, Dodge, and Jeep brands," Elmore affirmed. "These vehicles are still new to the market, so this year they will continue to be a novel alternative for local consumers."

The local Chrysler executive said Cissa expects to receive more LX platform vehicles (Chrysler 300C and Dodge Magnum), which are expected to strengthen sales and satisfy customers’ demand for these models, which have been in short supply due to high demand everywhere they are sold, Elmore added.

Concerning new product launches for this year, Elmore said Chrysler plans to bring out the 2006 Dodge Charger and the 2006 Dodge Mega Cab full-size pickup truck this summer, as well as the diesel-powered 2006 Jeep Liberty CRD (Common Rail Diesel) later in the year. The automaker has other surprises under its hood, which Elmore declined to reveal.

In February, local Chrysler, Dodge, and Jeep dealership Chrysler 65, on 65th Infantry Avenue in Río Piedras, reopened after a $2.5 million remodeling. The seven remaining Chrysler Group dealerships on the island are scheduled for facility improvements within the next 12 months, Elmore noted.

The local Chrysler executive said plans for 2005 include establishing a new full-service dealership in the Humacao area, which would bring the total Chrysler facilities on the island to nine.

Mazda expects 33% growth

After a banner sales year in 2004 of 6,771 new vehicles sold, a 24.6% jump over the previous year’s total, executives at local Mazda distributor Plaza Motors Corp. couldn’t be happier–the Japanese automaker achieved the highest sales gain among the top brands sold on the island, ending the year with a 5.04% market share.

The introduction of the Mazda3 and the hatchback version of the Mazda6 sedan were partly responsible for last year’s positive sales results, said Jaime Pibernus, Plaza Motors vice president of operations. "The sales success in 2004 was the result of the brand’s execution and the introduction of new models to the market, such as the Mazda3," Pibernus said.

"For 2005, we project Mazda sales will reach 9,000 units, which is a 33% increase from last year," Pibernus stated. To achieve this year’s aggressive sales goal, he is betting on the introduction of several limited editions of the Mazda3 and Mazda RX-8, with better specs and a higher level of standard equipment; the arrival of the Mazda6 MazdaSpeed, a turbocharged version of the Mazda6 sedan with 270 horsepower; and the new Mazda5 minivan (formerly the MPV), set to make its local debut this summer.

Mazda has 13 dealers in Puerto Rico and two in the USVI; most of them will be undergoing improvements this year. A new Mazda dealer is slated to open this year on Kennedy Avenue in San Juan.

Hyundai counting on expanded lineup

After finishing 2004 with its highest retail sales volume in six years, 5,630 units sold and up 9.2% from 2003, with a 4.19% market share, local Korean distributor Hyundai de Puerto Rico is confident the arrival of new products in new segments, as well as the redesign of existing models, will propel the brand towards a 6% to 7% sales increase this year, even though overall auto sales are expected to go down. In the past few years, the Korean brand has been experiencing growth, both in the quality level of its vehicles as well as in sales figures, noted Ricardo García, Hyundai de Puerto Rico director of operations.

"Hyundai’s quality is evident and has been recognized through the many awards it has received worldwide," García said, adding, "that’s why we have been able to penetrate further and enjoy stable sales growth in the local market." He also mentioned Hyundai has a product launch plan called "7/24," which consists of the launch of seven all-new or redesigned models within the next 24 months.

The first of such vehicles, the redesigned 2005 Tiburon, made its local debut in January. The 7/24 plan quickly followed with the all-new 2005 Tucson compact SUV in February and will continue with the all-new, completely redesigned 2005 Sonata midsize sedan this summer. The Sonata and Santa Fe midsize SUV will both be manufactured at Hyundai’s new state-of-the-art $1.1 billion assembly plant in Montgomery, Ala. Hyundai’s new plant is the Korean automaker’s most technologically advanced worldwide and its first in the U.S., which he said will contribute to the quality of Hyundai vehicles.

"By the second half of the year [2005], we will launch a redesigned Brio compact sedan and, for the first time, we plan to introduce a luxury midsize sedan, which will exceed the expectations of even the most demanding customers," García said.

"These new product launches and model improvements will help us continue with our sales growth." García projected sales of Hyundai SUVs and the brand’s new Sonata will increase 50% in Puerto Rico this year.

Hyundai de Puerto Rico, which currently has 16 dealerships on the island, plans to strengthen its dealership network before adding more outlets. "We will stay with the 16 dealerships we have right now in different strategic points throughout the island. Our plan is to strengthen our dealership network, and several of the dealerships are now in the construction stage of their new facilities," García said.

Honda enters pickup truck segment

Like most of its counterparts, local Honda and Acura distributor Bella Group enjoyed outstanding sales in 2004 when both brands achieved 13% and 44% sales increases, respectively, over the previous year. With 4,942 vehicles sold in 2004, Honda attained a 3.68% market share while Acura sold 952 units for a 0.71% market share.

Bella Group President Carlos López-Lay attributes the brands’ positive performances to its new products and a strong dealer network with good customer service. For Honda, the four-door Accord continued to be the midsize sedan segment’s undisputed champion with 1,370 units, and the new 2005 Odyssey minivan, launched in October, more than tripled sales in the last months of 2004 with a total 510 units by redefining a new standard for all minivans, López-Lay said. "The TSX, the TL, and the new RL are clear examples of Acura’s new direction, a perfect blend of luxury and performance."

There are eight authorized Honda dealers in Puerto Rico, including Bella Group’s Honda de San Juan and Honda de Bayamón, and one Acura dealership, also owned by the distributor. López-Lay predicts double-digit sales increases for both brands in 2005. Late last year Honda introduced new models, the 2005 Honda Accord hybrid and the new Odyssey, and more are on the way.

"For the first time, Honda will offer a pickup truck, the Ridgeline, which will revolutionize the industry with its design and technology," said Bella Group’s president. The Ridgeline began arriving at local dealerships this month. He added the company would introduce a completely new 2006 Civic this fall, featuring antilock brakes, side-curtain airbags, driver- and passenger-side airbags with occupant position-detection system (OPDS) technology and pedestrian-safety features as standard equipment on all its models for the U.S. mainland and Puerto Rico.

What is more, the new Civic will use Honda’s advanced compatibility engineering (ACE) body structure for improved occupant protection and capacity to withstand a collision with larger vehicles, the first application of this technology in a compact vehicle. There is also word that Honda will launch a new vehicle this year, the Fit, as the brand’s new entry-level car. American Honda hasn’t confirmed it.

As for Acura, the brand recently launched the 2005 RL after introducing the all-new TSX and TL sedans last year. The 2006 Acura RL, to be released this fall, will be equipped with collision-mitigation brake system (CMBS) with e-pretensioners, the most advanced accident-avoidance system to date, according to the automaker. Using millimeter wave radar, the system detects a collision before it happens and alerts the driver with audible and visual signals and by pre-tensioning the seatbelt. If an accident is inevitable, it applies the brakes to reduce the severity of the impact.

A new compact Acura SUV, the RD-X, is set to make its debut in 2006, López-Lay disclosed, adding the Honda dealer network is continuing to upgrade and remodel its facilities. He foresees establishing at least two more dealerships on the island.

Auto distributors raise concerns over auto excise tax

Industry leaders urge government to act on it quickly to prevent further sales losses

In 2004, more than half of the 134,391 vehicles sold in Puerto Rico were cars. The local industry sold 73,120 or 54.4% cars, and 61,271 or 45.6% sport utility vehicles (SUVs), which include light trucks, pickups, and minivans.

However, that wasn’t always the case. Before the major increase in the excise tax on SUVs and luxury vehicles, imposed in June 2002 by the Calderón administration, the sales percentages were skewed in favor of SUVs.

The higher proportion of passenger car sales in proportion to SUVs is expected to remain the same this year and in the near future, unless the auto excise tax hike is repealed. However, local auto industry sources have deemed it unlikely given the government’s current fiscal crisis and last year’s better-than-expected total new auto sales.

"In general terms, last year [2004] local consumers were more enthusiastic and let go of their fear of the excise tax. In fact, sport utility and luxury vehicles continued selling well, and the best-sellers were vehicles with the most expensive features," Toyota de Puerto Rico President Mario Dávila commented.

The possibility the auto excise tax increase may be repealed, or the entire excise tax system replaced by a consumer sales tax, could influence potential auto buyers to adopt a wait-and-see attitude, postponing their auto purchases, said several industry leaders. Though there are no signs of that happening yet, some industry insiders are a little wary.

John Bowen, general manager for local Suzuki distributor Suzuki del Caribe, agreed it is unlikely the Acevedo Vilá administration will repeal the tax because of the island’s dire economic situation, despite the fact it was a highly touted election-year issue.

"A replacement of the excise tax seems more likely and, in the end, more equitable for everyone," Bowen stated, adding "the uncertainty over the excise tax issue will make some people delay a purchase decision, so the government should move fast on this issue to avoid affecting the industry any further."

"Government should determine as soon as possible what it plans to do with respect to the excise tax on SUVs and luxury vehicles, because consumer uncertainty usually affects sales," Hyundai de Puerto Rico Director of Operations Ricardo Rivera said. However, he isn’t very optimistic. "I consider it very unlikely that the government will repeal the excise tax, since it needs the revenue," he stated.

Like Rivera, Ricardo La Costa, General Motors zone manager for Puerto Rico, the U.S. Virgin Islands, and South Florida, is among those none too convinced it will happen. "Given last year’s phenomenal numbers, the government would probably question why it should eliminate the excise tax on SUVs if it hasn’t affected sales, and that’s a great argument and a very difficult one to refute," La Costa said.

José Ordeix, vice president and general manager for local Nissan, Infiniti, Kia, and Saab distributor Motorambar, affirmed his company "is keeping close watch on the excise-tax situation, even though the probability of the government repealing the excise-tax increase looks pretty dim for the near future," he said.

The vice president of Operations of local Mazda distributor Plaza Motors Corp., Jaime Pibernus, is convinced the government won’t consider repealing the auto tax increase until it determines whether to implement a sales or value-added tax in lieu of the current system.

Hyundai is out to become world’s No. 5 automaker by 2010

New Montgomery, Ala., assembly plant key to U.S. market growth

As part of an aggressive plan dubbed "Global Top 5," Korean automaker Hyundai Motor Co. (HMC) is determined to move up two notches, from No. 7 worldwide to No. 5 by 2010, according to HMC Global Public Relations Director Oles Gadacz.

The ambitious plan involves introducing seven new or redesigned models within the next 24 months, entering new market segments, and using state-of-the-art technology in its first and most modern assembly plant in the U.S. this year, Gadacz revealed, adding the automaker is looking into adding a ragtop roadster, a minivan, a full-size Sport Utility Vehicle (SUV), and probably a hybrid to its growing line of vehicles in the near future.

Hyundai vehicles now account for more than 2% of the U.S. mainland auto market and 4.2% in Puerto Rico. Last year, the Korean automaker sold 5,630 vehicles in Puerto Rico, up 9.3% from 2003.

The HMC now markets a full line of vehicles that includes the subcompact Brio (Accent in the mainland U.S.), the compact Elantra sedan, the Tiburon Sports coupe, the midsize Santa Fe SUV, the Sonata midsize sedan, and the Tucson compact SUV. These vehicles were developed exclusively by the automaker and are fitted with engines and transmissions designed and engineered by Hyundai.

The Korean auto manufacturer recently launched its all-new Tucson compact SUV, which will be followed by the totally redesigned 2006 Sonata, slated to make its local debut this summer.

Hyundai in Alabama key to the plan

Hyundai’s ambitious goal to be the No. 5 global automaker by 2010 will depend greatly on its Hyundai Motor Manufacturing Alabama (HMMA) plant in Montgomery, the company’s first automobile assembly plant in the U.S. The $1.1 billion plant is scheduled to open in a few weeks, with nearly 2,000 workers producing the 2006 revised Sonata and Santa Fe models.

To move to No. 5, Hyundai projects it must increase its annual U.S. sales by decade’s end to one million. Hyundai plans to be making five million cars and trucks a year, with 3.5 million assembled in Korea and the rest at its state-of-the-art plant in Montgomery, Ala. When running at full capacity, the plant is expected to assemble 300,000 vehicles per year. By building a plant in the U.S., HMC not only saves on shipping and tariffs, it scores points with customers by bringing jobs and investment to the area. It also better positions itself for global expansion.

Quality and affordability its trademark

HMC’s trademark since it was established in 1967 has been cars and SUVs. Hyundai continues to provide customers with a high level of content and performance at an affordable price. Every vehicle in its lineup demonstrates the company’s emergence as an auto manufacturer whose products successfully compete with automobiles from around the world in technology, quality, styling, and refinement.

Hyundai first entered the U.S. market in 1986 with its subcompact Excel model. At the time, few Americans had heard of Hyundai or its products, but the Excel was still a smashing success, selling 168,882 units that year. Since then, Hyundai has experienced a significant transformation. In the U.S., the automaker has expanded its product lineup from one model in 1986 to its present six models, while shaking its "cheap carmaker" image and vastly improving product quality.

Over the past couple of years, Hyundai has become a leading automobile manufacturer, competing head-to-head with the world’s best and competing favorably in the U.S. market, Gadacz said. Testament to that is the numerous recognitions, awards, and high marks the Korean automaker has received from prestigious organizations such as Consumer Reports, J.D. Power & Associates, and AutoPacific, as well as five-star safety ratings from the National Highway Traffic Safety Administration.

Testing, research & design in U.S.

In 1996, Hyundai opened the Namyang Technology Research Center, which includes a complete testing facility with a 2.8-mile oval test track and a new $40 million aero acoustic wind tunnel. That same year, HMC began production at its state-of-the-art Asian Plant, southeast of Seoul.

Hyundai now operates eight research centers in Korea along with four international centers, including Hyundai America Technical Center, Inc. in Ann Arbor, Mich., and the $25 million Hyundai California Design Center in Irvine, Calif., which opened in 2003. That same year, a ceremonial groundbreaking event was held for the new Hyundai proving ground in the California desert near Edwards Air Force Base. This facility is scheduled to open this year.

The HMC, founded in 1947 as Hyundai Engineering & Construction Co. by the late Ju-Yung Chung, was established in 1967 as an automaker. Today, it operates the world’s largest integrated automobile manufacturing facility in Ulsan, on Korea’s southeast coast, and is the auto sales leader in the Korean domestic market. The company exports about 130,000 vehicles each month to 166 countries worldwide.

Puerto Rico New Auto Sales

1998 to 2004

Year: Total / % Change

1998: 128,813 / –

1999: 128,505 / -0.2

2000: 123,403 / -4.0

2001: 122,958 / -0.4

2002: 123,054 / +0.08

2003: 122,794 / -0.2

2004: 134,391 / +9.4

Source: Plaza Motors Corp. Puerto Rico Automobile Retail Sales Report

Best-Selling Vehicle Brands in Puerto Rico

2003 vs. 2004

Brand: 2003 / 2004 / % Change / % Market Share ’04

Toyota: 30,173 / 34,810 / +15.4 / 25.9

Ford: 14,606 / 14,244 / -2.5 / 10.6

Suzuki: 11,940 / 12,743 / +6.7 / 9.5

Mitsubishi: 10,419 / 11,798 / +13.2 / 8.8

General Motors: 9,466 / 9,737 / +2.9 / 7.3

Nissan: 8,428 / 9,198 / +9.1 / 6.7

Mazda: 5,436 / 6,771 / +24.6 / 5.0

Hyundai: 5,157 / 5,630 / +9.2 / 4.2

Kia: 5,100 / 5,126 / +0.5 / 3.8

Honda: 4,362 / 4,942 / +13.3 / 3.7

Scion: N/A / 2,054 / N/A / 1.5

Subaru: 437 / 506 / 15.8 / 0.4

Source: Plaza Motors Corp. Puerto Rico Automobile Retail Sales Report

This Caribbean Business article appears courtesy of Casiano Communications.
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