Hyundai Motor and Kia Motors are trying to overcome the current downturn by aggressively opening overseas assembly plants one after another.
The car makers will start building a second American plant for Hyundai Motor within this year while holding a groundbreaking ceremony for a fifth Chinese plant on June 23 in Chongqing. Kia Motors is busy constructing a plant in Mexico while Hyundai Motor is reviewing a plan to build a second plant in India.
An official with Hyundai Motor Group said on the 22nd, "We are studying a plan to locate the second U.S. plant either in Alabama or Georgia where existing Hyundai and Kia plants are located. We will soon come to a decision on location." Given easiness of auto factory establishment, synergies with the existing plant, and convenience in hiring workers, analysts said Hyundai's Alabama plant is a more likely option.
Already the Alabama plant has a land site in the premises, which makes it ideal for building a second plant. In addition, given the fact that the second plant will focus on the production of sports utility vehicles, it is better to be located near the Alabama plant that is currently producing passenger cars like the Avante and Sonata only. Hyundai's Santa Fe, its mainstay SUV model, is currently produced in Kia's Georgia plant under consignment arrangements. The market share of Hyundai and Kia in the U.S. SUV market has fallen to a low of 8 percent due to output shortage. Once the group begins breaking the ground within the year's end, it will start mass-producing SUVs from the first half of 2017.
The main motivation for Hyundai Motor Group to accelerate its effort to build extra capacity in America has to do with the chairman's special instruction. Earlier in March this year when chairman Chung Mong-koo visited the U.S. subsidiary, he said, "In difficult times like now we have to be bold in investing aggressively. We have to focus our resources on SUVs as the SUV market is rising fast recently."
Meanwhile, he will visit Chongqing on June 23 to take part in the groundbreaking ceremony of its fifth assembly plant in China. This is only 80 days after the group held a groundbreaking ceremony of its fourth plant in Cangzhou (Hebei Province) on April 2.
