Hyundai, Kia plan $3.1 billion U.S. investment, consider new plant
SEOUL -- Hyundai Motor Co. and Kia Motors Corp. said they will spend $3.1 billion in the U.S. in the next five years, joining other vehicle manufacturers in announcing investment plans amid threats from President-elect Donald Trump of higher levies on auto imports from Mexico.
The planned U.S. investment by South Korea’s two largest automakers is nearly 50 percent more than the $2.1 billion they spent in the previous five-year period, Hyundai Motor President Chung Jin-haeng told reporters in Seoul on Tuesday. The group is considering building a new factory in the U.S. and may produce Hyundai’s upscale Genesis vehicles and a U.S.-specific SUV in the country, said the executive, who also oversees the strategic planning for Kia.
“We expect a boost in the U.S. economy and increased demand for various models as President-elect Trump follows through on his promise to create 1 million jobs in five years,” Chung said. “We will actively consider introducing new models that have increasing demand and profits.”
Hyundai and Kia join a growing list of automakers announcing investments in the U.S., even though they have yet to be singled out by Trump. Toyota Motor Corp., Ford Motor Co. and Fiat Chrysler Automobiles said this month they’ll spend on U.S. plants after the president-elect threatened for months to slap Mexico-built vehicles with a 35 percent import tax. Carmakers are eager to cooperate with the incoming administration as they prepare to ask for favors including weaker fuel economy rules and lower corporate taxes.
“When automakers such as Toyota announced their new strategies in response to the so-called Trump risk, the industry was nervous and asked, ‘Who’s next?’,” said Kim Jin-woo, an analyst at Korea Investment & Securities Co. in Seoul. “This is positive news that came at the right time as the automakers were facing capacity constraints in the U.S,” he said referring to Hyundai and Kia’s investment plans.
General Motors plans to announce on Tuesday it will invest $1 billion in U.S. plants over several years, two people familiar with the matter told Automotive News. The automaker expects to add or retain 1,000 jobs at several existing facilities, said the person, who asked not to be identified because the matter is private.
Hyundai and Kia will invest about 30 to 40 percent of the $3.1 billion on new technologies such as autonomous driving and green cars. The rest will be spent on facilities and adding new models, according to the company.
Hyundai has been considering expanding its plant in Montgomery, Ala., which produces the Sonata, Elantra sedans and Santa Fe crossover. The factory is running at its top capacity of 370,000 cars a year. Kia’s factory in West Point, Ga., is also at full tilt, producing 360,000 units of the Optima sedan and Sorento SUV a year.
Kia opened a new $3 billion, 200,000-vehicle-a-year production line in Mexico two months before the U.S. presidential election, with plans to increase capacity there to 300,000 units this year and to 400,000 vehicles by the end of 2018.
The automaker may add a new SUV model to the plant in the Mexican state of Nuevo Leon, though the decision isn’t final and the company has “flexibility” on its strategy, Chung said. Kia is targeting to export 80 percent of cars made in Mexico, mainly to the U.S. and Latin American markets.
Hyundai and Kia have no additional plans to invest in Mexico and will not transfer production or jobs from the U.S. to Mexico, according to a company spokesman.
“The U.S. market is strategically a very important market for us and success or failure there is a barometer of our success globally,” Chung said. “Our interest in the U.S. market is consistent regardless of the government of the day.”