Hyundai Motor going strong with $388 million investment in U.S.

Lim Chang-won Reporter Posted : 2018-05-30 14:21 Updated : 2018-05-30 14:21
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[Courtesy of Hyundai Motor]

SEOUL -- With expansion talks buzzing around its U.S. plant for years, Hyundai Motor has finally disclosed plans to invest some $388 million in building a new engine plant that would help the South Korean carmaker strengthen its competitiveness in the American market.

The company said its investment in Hyundai Motor Manufacturing Alabama (HMMA) in Montgomery would be used to build a plant dedicated to the production of engine heads and enhance its existing assembly plant for newer models of its Sonata and Elantra sedans.

The investment is Hyundai's biggest in the U.S. plant since it opened in 2005, and the new facility will be operational by mid-2019. The company has promised to assemble the revamped version of its flagship sport utility vehicle, Santa Fe, in Montgomery.

"Hyundai is continuing its track record of investing in new manufacturing technologies to ensure the long-term success of our Alabama assembly plant," HMMA President Choi Dong-ryeol said in a statement released through Hyundai's website.

Carmakers around the world have been struggling with problems such as fierce market competition, a slowing economy or growing demands for technical innovations. Hyundai was not spared as its profitability was undermined by competition with rivals in China and other major markets as well as increased marketing costs.

Hyundai's full-year net profit in 2017 fell 21 percent on-year to 4.54 trillion won ($4.29 billion) with sales in China falling 31 percent from a year ago. U.S. sales last year fell 11.5 percent on-year due to a lack of new models. To remain as a major global player, Hyundai's U.S. operation will develop a next-generation engine which requires new technologies and components.

"Hyundai is an important member of Alabama's dynamic auto industry, and this expansion at its Montgomery manufacturing facility will power the global automaker's drive for future growth in the U.S.," Alabama Governor Kay Ivey was quoted as saying in the statement.

HMMA vice president Chris Susock had said Hyundai expects its new Santa Fe to reverse a trend that had the Montgomery plant decrease its overall production. For several years, the plant has made only Sonata and Elantra sedans.

The new investment underlines Hyundai's commitment that it would remain competitive in the global market. Hyundai's efforts to head of its current business woes can also be seen with the recent release of its new Santa Fe SUV, which is projected to help the South Korean company reach new highs in terms of sales in China.

After a dismal first-quarter performance, Hyundai and its affiliate Kia Motors are on track to receive their sales target of 7.55 million vehicles this year as they are expected to post nearly 10 percent on-year sales growth in the second quarter of this year.

This story was contributed by Jazin Wee, an editorial assistant.