Hyundai is likely to eventually build cars at partner Kia's assembly plant due to open in 2006 in Zilina, Slovakia.
"There's a very high possibility that we will produce models there, but for the moment, we are still in negotiations," said Werner Frey, Hyundai Europe vice president. South Korea's Hyundai holds a majority stake in Kia.
Hyundai wants to start production in 2007 or later, after the Kia plant in northern Slovakia is operating at full capacity.
Hyundai's plan is to build at Zilina three body styles of a lower-medium vehicle to replace both the Elantra and Accent. Based on the E-Cubed prototype shown at the Geneva auto show, Zilina would build five-door, wagon and SUV versions. A four-door version would be built at a Hyundai plant in Izmir, Turkey.
"As we plan to triple our current sales volume of 50,000 units of the Elantra and Accent, we will build their replacement models in Zilina," Frey said. He added that both cars will share many components with Kia's medium-segment models.
At first, Hyundai plans to build 100,000 units a year of the new car.
Kia Europe Vice President Jean-Charles Lievens said that at first "the Zilina plant will be an exclusive Kia plant." The first car to be built there in 2006 will be "an evolution from the current Cerato," Lievens said.
Last March, Hyundai was expected to announce that it would build the Zilina plant. But, surprisingly, it was Kia that said it would construct the plant.
Said Frey: "That was a decision of Kia that we have respected, as Kia is only owned 60 percent by Hyundai."