Hyundai ponders second U.S. plant

As a lack of production capacity restrains its growth, Hyundai will consider a second U.S. assembly plant.

"That's something that we're going to look at," Hyundai Motor America CEO John Krafcik said last week at the Detroit auto show. "We'll look at how we do in 2011 and make our decision probably after this year."

Executives expect continued strong demand for the Sonata and redesigned Elantra that went on sale last month. Both are built at Hyundai's assembly plant in Montgomery, Ala.

"Our biggest problem for the next year is that we're not sure we're going to have enough product to meet demand," said Dave Zuchowski, Hyundai's U.S. sales boss.

Krafcik said there are no concrete plans for a second assembly plant, but another plant is in the company's future:

"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, it's got to be somewhere out there."

Hyundai sold about 540,000 vehicles in the United States in 2010, up 24 percent from 2009. The total included nearly 200,000 Sonatas.

The brand's U.S. market share rose from 4.2 percent in 2009 to 4.6 percent in 2010.

Zuchowski expects sales to increase in 2011, but production capacity will keep them somewhere short of 600,000.

"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," he said.

The Alabama plant, which produced 300,500 vehicles in 2010, already is at full capacity. It's running two 10-hour shifts five days a week and weekend shifts "whenever possible," Krafcik said.

In October, Hyundai moved production of its Santa Fe SUV to Kia's plant in West Point, Ga., freeing up capacity to build more Sonatas.

From August through October, Hyundai averaged 25,600 Sonata sedans per month in Alabama. It built about 16,600 per month from January through July, when the Santa Fe also was produced at the plant. Sonata production dropped to 17,829 units in November as Hyundai ramped-up Elantra production.

Zuchowski said Hyundai still is unable to produce enough Sonatas to meet demand.

"To be honest, we don't know how high is up on Sonata because we can't build enough, and Elantra is going to be an even hotter vehicle than Sonata was last year," Zuchowski said.

"We're actually OK with a stabilizing market share," he said. "We've managed crisis before in the past. We really haven't managed success yet."

By Ryan Beene- Automotive News