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Hyundai Plans to Build Second U.S. Factory, Says Report

March 11, 2015

Hyundai Motor Co. has made the decision to build another manufacturing facility in the United States, according to South Korea’s Yonhap News Agency. Citing an industry source familiar with the automaker’s plans, the news agency reported that the plant will be built to help meet strong demand for sport utility vehicles (SUVs).

According to Yonhap, the new U.S plant will be constructed in Alabama. The facility will break ground this year and begin SUV production in 2017. The plant is expected to have an annual output of 300,000 vehicles.

Hyundai did not confirm the report. A company spokesman simply said that there are no plans at this point.

Hyundai’s U.S. executives have been asking for additional production capacity for SUVs, which are very much in demand in the U.S. at present due to lower gas prices. While the South Korean automaker’s U.S. sales went up 4 percent from January to February, this growth lags behind market growth by 5 percent. This is mostly because Hyundai is dependent of sedan deliveries, which have declined as more consumers opt for crossovers and SUVs.

If Hyundai indeed plans to build a factory, the facility will be its second in the country and in Alabama. The company already has a factory in the state which manufactures its Elantra compact sedan and Sonata mid-size sedan. Hyundai currently builds its Santa Fe SUV at the production plant of its affiliate Kia Motors Corp. in Georgia.

Meanwhile, Kia Motors will have another factory in North America. The company will begin production at its first Mexico plant in the first half of next year to free up capacity at its Georgia factory. The Georgia location is already running at full capacity. Reuters reported that Kia will be using the Mexico plant for the production of the Rio subcompact and Forte compact cars.

Also rumored to be building a U.S. plant is Jaguar Land Rover (JLR). The British automaker is reportedly planning to build a factory in South Carolina. While JLR has confirmed that it will need a U.S. factory to sustain growth and remain competitive, the company is not planning to build one anytime soon. In fact, JLR will be making a decision about the U.S. plant in three years.

JLR CEO Ralf Speth said that in order for them to push through with a U.S. plant, they need a production model that will sell about 30,000 to 40,000 units in the U.S. alone. The automaker’s top-selling model in the U.S. last year was the Range Rover Sport, which sold only less than 16,000 units.

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