Hyundai poised to hike capacity after two-year pause in expansion

Article by Anita Panait, on February 12, 2014

Following a two-year pause in capacity expansion implemented by chairman Chung Mong-koo, Hyundai Motor Co. and affiliate Kia Motors Corp. are now seeking to increase their manufacturing capacity. While the capacity freeze – targeted at providing sites and parts suppliers a breather following rapid growth over the past decade and shift the focus on to quality – is still in effect, some executives are now more confident on the quality of the group's vehicles. 

The group has been conducting feasibility studies in promising markets like Mexico and scouting for a site for its fourth Chinese plant, which decision may come before the end of this year. "We're poring over mid- to long-term capacity investment plans now," a Hyundai group executive told Reuters. The capacity expansion freeze has made it difficult for the carmaker to squeeze additional capacity from existing site. 

In 2013, Hyundai and Kia combined utilized 105 percent of their installed capacity. A consultant familiar with Hyundai's site operations said that its Georgia and Alabama sites, are running flat-out, with utilization rates at 125-130 percent on a two-shifts-a-day basis. "That's just not a sustainable approach if it lasts a few more years, even though the ban has been highly beneficial to Hyundai's bottom line," one source privy with the company's plans told Reuters.

Topics: hyundai, production

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