Hyundai Reportedly Planning Second U.S. Plant

Hyundai denies a Korean news report that the automaker intends to begin building a second plant in the U.S. this year and is negotiating with officials in Alabama and other states.

The government-owned Yonhap news agency reported Sunday that an anonymous company source in Korea says the plant would have annual production capacity of 300,000 units. The source will not identify the other states being considered because it could interfere with the ongoing negotiations in Alabama, where Hyundai Motor America has operated an assembly plant since 2005.

Yonhap first reported in March that Hyundai was considering building a second U.S. plant to restore market share by meeting demand for CUVs, a market segment in which it offers only two models. A Hyundai spokesman said at the time the automaker had no plans to add a second U.S. plant, and the automaker issued a similar denial in response to the latest report.

The subject of a second plant in the U.S. is particularly sensitive as Hyundai continues contract negotiations with the Hyundai branch of the Korean Metal Workers Union. One of the union’s demands is that it be given a voice in production allocations, including construction of overseas plants. Hyundai insists the talks stay focused only on wages and working conditions.

Industry analysts have said in Korean news reports that the high cost of labor in the country is driving its automakers to increase output in overseas locations at the expense of local production.

Hyundai’s U.S. market share through April was 4.5%, compared with 4.4% year-ago, according to WardsAuto data. The flat result reflects the automaker’s struggle to build sufficient inventories of its Tucson and Santa Fe CUVs, its only two light-truck models in a market segment that accounts for more than half of all new vehicles sold in the U.S.

Hyundai Motor America has confirmation from parent Hyundai Motor that 65,000 Tucsons built at Ulsan, South Korea, will arrive this year in the U.S., up from about 40,000 last year.