Hyundai Motor Co. is planning to expand its assembly facility in Alabama, as it seeks to hike production of hot-selling SUVs, three people privy with the matter told Reuters. Hyundai is seeing demand for its sedans like the Elantra and Sonata slow down as consumers continue their shift to SUVs and crossovers because of the lower fuel prices.
One of the sources said the new assembly line will be right next to the current Alabama line, adding that State of Alabama is negotiating final terms. However, a spokesman for the South Korean carmaker remarked there were "no plans at this stage" to hike capacity in the United States. The Santa Fe is currently being assembled at the production site of affiliate Kia Motors in Georgia.
The Tucson, meanwhile, is being shipped from South Korea. Hyundai’s Alabama site is currently home to the Elantra compact and Sonata midsize sedans. Two other sources told Reuters that the South Korean carmaker had been mulling building a new US assembly line to cater to SUV demand.
Korea Investment & Securities auto analyst Suh Sung-moon remarked that Hyundai needs to build a second plant in the US, adding that Hyundai might shift Santa Fe output to Alabama.
A report by the Yonhap News Agency said that a new site in Alabama would have the capacity to build 300,000 vehicles annually and would commence building SUVs in 2017. Hyundai saw its sales in the first two months of the year jump 4.3 percent, less than of the market's 9.2 percent gain.