Hyundai’s production cuts don’t deter Kia

Hyundai Motor Co. is cutting production at its Alabama assembly plant, but sister Kia Motors Corp. is forging ahead with its goal of building 300,000 vehicles annually in the United States.

That’s the planned production capacity of the $1.2 billion plant Kia is building in West Point, Ga. The plant, scheduled to open in late 2009, will be nearly identical to the one Hyundai operates in Montgomery, Ala.

“We’ve said all along that 300,000 is maximum capacity. We’re not backing off at all. What’s happening at Hyundai does not impact us,” said Alex Fedorak, spokesman for Kia Motors America and acting spokesman for the Georgia project.
Sagging sales have prompted Hyun-dai to idle the Montgomery plant three days this month. Plans are to halt production an additional seven days before year end to trim inventories of unsold Sonata sedans. The two-year-old Montgomery plant first operated at full production in September 2006.

U.S. sales of the Sonata are down 19.6 percent through the first nine months of 2007. An uptick in sales of the Santa Fe crossover, also produced in Montgomery, hasn’t been enough to cover the loss.

The Sonata’s weakness is pulling down Hyundai overall, as total U.S. sales slipped 0.2 percent in the first nine months of 2007.

Over the same period, Kia’s U.S. sales rose 4.5 percent to 232,043. Despite the respectable growth, Kia is still a long way from its stated target of 500,000 vehicles annually by 2010.

Kia and Hyundai compete for buyers, but they collaborate as much as possible in manufacturing.

Their U.S. plants, 80 miles apart, will share many suppliers. And a second engine plant Hyundai is building in Montgomery also will supply four-cylinder engines to Kia in West Point.

But unlike Hyundai, whose Alabama-made vehicles are exclusively for North America, Kia intends also to export vehicles from West Point.

How many of the vehicles built in West Point will go overseas likely depends on which vehicles Kia builds there, a detail the automaker has yet to reveal.

Speculation has centered on the Optima sedan and Sorento SUV. Michael Choo, a Kia spokesman in Seoul, would neither confirm nor deny that speculation. An announcement is expected “fairly soon,” he said.