Hyundai Motor Co., which has been gaining market share in the U.S., is moving production of its Santa Fe sport-utility vehicle from its plant in Alabama to a new plant owned by affiliate Kia Motors Corp. in Georgia, a Hyundai spokesman said Tuesday.
The move is intended to help fill Kia’s plant and give Hyundai more capacity to make its Sonata sedan in Alabama.
Production of the Santa Fe will begin sometime this fall at the West Point, Ga., plant that opened in February and now makes the Kia Sorrento. Hyundai owns 34% of Kia, which are both South Korea-based auto makers. The move will free up nearly 100,000 units of capacity at Hyundai’s Montgomery, Ala., plant to build Sonata sedans, which are selling rapidly, said Chris Hosford, a company spokesman.
Hyundai’s U.S. market share has risen to 4.7% through July of this year from 3% at the end of 2008. It was one of only three car makers, along with Kia and Subaru, to post a sales increase in 2009 as the U.S. auto market collapsed.
Hyundai joins other car makers seeking to boost their U.S. production capacity as the vehicle market has rebounded.
Volkswagen AG is building a plant in Chattanooga, Tenn., scheduled to open next year, which will be the first U.S. factory for the German car maker since it closed a plant near Pittsburgh in 1988. Toyota Motor Corp. is finishing a plant to make Corollas in Blue Springs, Miss., and General Motors Co. plans to reopen a plant in Orion, Mich., to make compact cars.
Hyundai is at full capacity at its plant in Montgomery. John Krafcik, chief executive of Hyundai’s U.S. operations, said sales of the Sonata, which was redesigned this year, are being held back by lack of supply. Sonata sales were up 45% this year through July. All Sonatas sold in the U.S. are made in this country.
Mr. Krafcik estimated in an interview last week that Hyundai is likely to need to increase its annual production of Sonatas and other models by 100,000 vehicles within two years, due to rising demand as U.S. auto sales recover. Hyundai made 116,569 Sonatas in the U.S. this year through July.
The Kia plant was built with the ability to make 300,000 cars a year and currently makes only the Sorrento, which is based on the same basic components as Hyundai’s Santa Fe SUV. After production of the Santa Fe begins there, the plant still will have excess capacity but there are no announced plans to add other Kia or Hyundai production.
Meanwhile Tuesday, U.S. regulators said they are investigating a reported steering problem with the Sonata. The alleged defect, which affects about 16,300 vehicles, involves the detachment of a steering shaft, resulting in a loss of steering capability, according to documents posted Tuesday on the National Highway Traffic Safety Administration’s website.
No accidents have been linked to the reported defect.
Hyundai spokesman Jim Trainor said two Sonata owners reported similar steering problems to dealerships and that the auto maker fixed those vehicles. He said the company plans to cooperate with the government investigation.