Hyundai’s Tariff Strategy: ‘Sell Like Hell’

The current state of the auto industry feels a lot like a scene from The Office—automakers are putting on a brave face while trying to hide the fact that they secretly shaking in their boots over tariffs. I’ll tell you this much: Hyundai is pulling off the brave act so well that I’m wondering if it’s an act at all. The South Korean carmaker exudes all kinds of confidence that it’ll pull through with just a flesh wound.

Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Today, Hyundai is taking off the gloves to achieve another record year. Also, the United Auto Workers union says automakers need to suck it up and just absorb tariffs. And VW’s CEO defends Scout’s lack of dealers. Let’s jump in.

30%: Hyundai’s Tariff Strategy: ‘Sell Like Hell’

Photo by: Hyundai

If you haven’t noticed by now, Hyundai has been playing it cool when it comes to tariffs—at least publicly, that is. While the CEOs of other automakers are vocalizing their concerns to the U.S. President, Hyundai’s North American boss, Randy Parker, is rolling up his sleeves in what might be Hyundai’s most important tariff tussle yet.

The solution to the tariff problem at hand? According to Parker, it’s refreshingly simple: “Sell like hell.”

No, that’s not a paraphrase. The Hyundai CEO is gearing up for the brand to take on the very real probability of tariffs wreaking havoc on the entire auto industry in the coming months. And like a coach giving a very real locker room talk to the team, Parker set out to rile up the entire audience at the J.D. Power Auto Forum ahead of the New York Auto Show with some inspirational words.

“This year is going to be no different,” Parker said, referencing Hyundai’s four consecutive years of record sales. “Tariffs or no tariffs, we’re going to figure it out, support our dealers and customers and make it five years in a row.”

Hyundai had a great 2024. In total, it closed the year with 836,802 sales in the U.S.—that’s a 4.4% hike over 2023. A significant amount of that growth was in the EV segment, which made up 8% of Hyundai’s U.S. sales. And Parker isn’t ready to stop the train.

The marque made it clear that it wasn’t ready to raise prices in the U.S., at least not yet. In the near term, Hyundai plans to absorb tariff-related increases until at least June 2nd as part of its Customer Assurance Program. Anything after that is simply uncharted territory.

Keep in mind that Hyundai also pledged a cool $21 billion to U.S. manufacturing just last month. That cash will go to bolster domestic manufacturing capacity, including a local steel mill in Louisiana, plus scaling its output at its 3,000-acre EV and battery plant in Georgia. In all, the push to domesticate manufacturing will increase its local production rate by around 20% to 1.2 million cars annually. Of those, 500,000 could be a mix of BEVs and hybrids.

As long as Hyundai can keep its costs down, the brand will likely find a place in U.S. driveways. It’s quickly become one of America’s fastest-growing brands, landing fourth in overall market share just behind GM, Toyota and Ford.

60%: UAW Claims Automakers Can Just Absorb Import Tariffs

Hyundai is holding strong, but other brands are in the corner, curled up in the fetal position trying to figure out how to make this tariff mess work. Meanwhile, in walks United Auto Workers president Shawn Fain, who brings not sentiments of sympathy or support, but a big fat bucket of “suck it up, buttercup.”

In a recent public address, Fain called on automakers to simply absorb the new 25% tariffs ripping across the auto industry (or more if the parts originate from China), citing years of record-breaking profits as justification that the brands can afford it in order to protect the U.S. economy.

GM Authority gives an overview of Fain’s reasoning:

UAW president Shawn Fain gave a public address on the union’s Facebook page last week entitled “Our Economy, Our Country, Our Union.” One of the main topics Fain addressed was the current state of the auto industry and the UAW’s efforts in “ending the free trade disaster.”

“Free trade has been a disaster for the working class,” Fain said. “The government gives a green light to companies to build their product wherever they can find the most exploited workers. Countries where desperate people will work for $3 an hour, where there are no labor laws, and where there are no environmental regulations.”

“Then, the companies kill jobs in the US and run a race to the bottom across the globe. They force workers across borders to compete with one another,” Fain continued. “And the companies ship product back in at massive profit, which they pocket for the executives, the shareholders, and pay off the politicians for good measure.”

So, how can tariffs help the UAW with the free trade problem? “In our view, tariffs are a first step. They are a tool in the toolbox. They have to be well-designed. They need to be paired up with other policies and changes. But they are a start to stop the bleeding,” Fain said.

To Fain’s point, it’s not like these automakers are hurting for cash. 2023 and 2024 weren’t exactly rough times for the auto industry, and in a post-Covid economy where consumers were still lapping up every excess automobile thanks to pent-up buying, brands were raking in cash. By year-end 2024, GM was sitting on $27.1 billion in cash reserves. Ford had a sizable nest egg of $38.4 billion. And Stellantis? A cool $38.6 billion.

The public callout was basically the UAW’s way of reminding automakers that their balance sheets aren’t all that secret while also giving the ol’ tongue-in-cheek “nice try.”

UAW’s stance now puts automakers on the defensive. If they raise prices or cut production, they might look greedy. If they don’t, the UAW could use the ability to pay out of cash reserves as a bargaining chip for inflation-induced wage negotiations. It’s kind of a lose-lose for brands, and it certainly isn’t sustainable in the long term. And perhaps even more damning is the support that it could muster for the UAW from political allies in Washington who support the far-reaching tariffs.

90%: VW CEO Tells Dealers Scout ‘Can Make Their Own Business Model Decisions’

Photo by: Scout Motors

Volkswagen’s dealers aren’t too happy with Scout Motors right now. The blue-collar EV spinoff has made the decision to utilize a modern direct-to-consumer sales model, which means cutting out the dealer from sales revenue. And since Scout has close ties to VW, dealers have argued that they should get a slice of the pie as part of their existing franchise agreements.

Not so fast, though. Scout has remained steadfast that it’s an independent brand that just so happens to live under the Volkswagen Group umbrella. Now, Volkswagen Group of America CEO Kjell Gruner has found himself in the crosshairs of the dealer battle and must walk the tightrope with no net underneath—just a pit of angry dealer principals who want their claws in Scout’s inventory.

It turns out that Gruner is apparently quite the skilled funambulist. He spoke at the New York Automotive Forum recently to address growing concerns from dealers. And in a few short words, Gruner defended Scout’s right to go with a direct-to-consumer model as it prepares for deliveries in 2027 amid legislative pushback.

Automotive News brings his words to light:

“I totally understand the perspective from the dealer side,” Gruner said April 15, speaking at the New York Automotive Forum here.

Scout, led by former VW Group of America CEO Scott Keogh, is launching a new electric pickup and SUV to be assembled in South Carolina. It revealed plans to sell the two light trucks direct to consumers in October, a move that will sideline VW’s dealer network that has long clamored for a pickup and additional SUVs.

VW Group and Scout Motors maintain the Scout truck brand is independent and autonomous.

Gruner reiterated that Scout is not part of VW Group of America.

“It is a sister company and they, in the Volkswagen Group, can make their own business model decision,” Gruner said. “So they can decide which suppliers to choose. They can decide which go-to-market model to choose.”

Gruner is no stranger to the direct-to-consumer model. The VW boss, a former Porsche executive, also served as Rivian’s chief commercial officer and head of business growth for nearly a year. And as you may know, that’s Rivian’s main sales framework. So he knows the benefits and struggles that a small electric startup can face.

Perhaps that’s why he also added this next bit:

“From my perspective, it needs to be win-win,” said Gruner, addressing the franchise dealer business model. “I’m a big fan of win-win. I hate win-lose discussions. When our dealers are successful and profitable, then this is good for our business and vice versa. In order for us to be successful and profitable, we need dealers.”

It’s hard to ignore the bit of corporate hand-washing that’s going on here. Gruner supports Scout’s autonomy, but recognizes the need for dealerships. He pledges allegiance to the dealer network, but knows that younger buyers are gravitating towards buying a car with just their phone. Perhaps adopting Switzerland’s neutrality is the CEO’s way of keeping a window open just in case Scout needs the dealer sales and service network down the road, just like Polestar is finding out.

100%: What Is The Future Of The Dealership Model?

Photo by: Kia

Dealerships can be a hate-it-or-love-it experience. I’ve read horror stories about after-sales experiences at Hyundai, and Porsche buyers cherishing memories of getting behind the wheel of their dream car 20 years before they were ready to actually buy it.

But times are a-changing and folks are gravitating towards the contactless buying method that lets them simply hop on an app, buy a car, and take delivery. Hell, it was one of the coolest experiences about buying a Tesla—although for someone who might not know much about the car they’re buying, the dealership and salesperson model could still be very helpful.

This has me thinking: what exactly will the future of dealerships look like? Will dealers be spaces where folks can try out a car before ordering on an app? A service center just to drop off their ride when it’s broken? Or maybe the traditional model isn’t going anywhere at all, and I’m wondering if this all for nothing.

Let me know your crystal ball theories in the comments.