Hyundai Evaluating Building a Second Manufacturing Plant in the U.S.

Hyundai’s sales are currently limited more by its lack of production capacity than a lack of eager customers -- to which the solution is to add production capacity. No surprise then that Hyundai Motor America is currently evaluating constructing a second manufacturing plant to boost capacity.

“Our biggest problem for the next year is that we’re not sure we’re going to have enough product to meet demand,” Dave Zuchowski, Hyundai’s executive vice president of sales, told Automotive News.

Last year, Hyundai set a corporate sales record with almost 540,000 vehicles sold, nearly 200,000 of which were Sonatas. In order to accommodate the insatiable demand for the new midsize car, Hyundai was forced to shuffle production around, moving production of its Santa Fe to sister-brand Kia’s Georgia manufacturing plant. Despite running at full capacity and building some 300,500 vehicles in 2010, the plant couldn’t keep up with demand. This year, Hyundai’s adding another hotly anticipated product, the new Elantra, to the Alabama plant, which may sway Hyundai’s decision on building a second plant.

“ [A second plant] is something that we’re going to look at,” Krafcik told AN at the Detroit auto show. “We’ll look at how we do in 2011 and make our decision probably after this year.”

Krafcik added that Hyundai doesn’t have any concrete plans to build a second plant in the U.S. right now, but that a second U.S. plant has to be in the cards eventually given the company’s impressive growth recently. Hyundai increased its sales by 24 percent in 2010 over 2009, bringing total vehicle sales just shy of 540,000 units. Zuchowski expects the sales trend to continue, especially with the new Elantra joining the Sonata, but production capacity will keep sales below 600,000 vehicles.

“The wild market share increases that we’ve had over the last two years are going to be tough to duplicate, just because of global capacity,” Zuchowski said.

“If you look at the growth that we’re going to have in our future and the fact that we have an overall philosophy of building where we sell, [a second plant] has to be somewhere out there,” Krafcik added.

Despite the admission that the company’s impressive sales growth will be stymied this year by the lack of production capacity, a spokesman confirmed that neither Chung Mong-Koo, CEO of Hyundai, or John Krafcik have decided upon building another plant but are seriously considering it. Will we see a second Hyundai plant erected in the U.S. at some point in the near future? It’s a distinct possibility.

Source: Hyundai, Automotive News (Subscription required)

Daniel
I think Hyundai is prudent for the wait and see attitude...If the economy continues to grow then you will see an announcement by the end of the year...if the economy as a hiccup or an unexpected downturn then Hyundai is playing it safe and will still do well with the new and future product that is coming out. This company is a danger to all other auto companys who haven't invested in themselves or is now just starting to do so.

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