Hyundai says no capacity expansion planned in US

Hyundai Motor's US unit plans to make an announcement on Monday US time regarding existing engine production facilities, but it does not involve a capacity expansion, a company official said.

Hyundai Motor said earlier that the company and the state of Alabama would announce on Monday "additional investment in the existing infrastructure" at its auto assembly plant near Montgomery.

A Hyundai spokesman, Robert Burns, declined to give specifics of the announcement that will be made at the Alabama capitol building in Montgomery, the state capital.

The announcement comes as Hyundai's US sales are booming. The Korean company is the fastest growing major automaker in the US market. Its sales rose 31 per cent in the first four months of 2011 for a model lineup laden with fuel-efficient small cars as consumers seek vehicles that can help overcome gasoline prices that have risen above $4 per gallon over much of the United States.

Hyundai's US chief executive, John Krafcik, earlier this year said the automaker's US sales will be constrained by limits to its current production, but has not commented on any plans to expand the company's US production.

Sources told Reuters that Hyundai in recent months has spoken at least informally with at least three US states including Alabama about plans for a second plant in the US Southeast. Officials in South Carolina and Mississippi expressed interest in luring the Korean automaker to place new production in those states.

It was not known whether Monday's announcement is a prelude to a second factory near Hyundai's existing plant in Alabama. The company owns about 1,750 acres (708 hectares), and its current assembly plant takes up less than a third of that land.

Sources told Reuters that Hyundai is considering placing a second assembly plant on the same site as its existing one south of Montgomery.

One source told Reuters that any new plant would produce a subcompact car, the size of the Hyundai Accent which is now imported to the United States.

Hyundai's Alabama plant makes two of the hottest selling cars in the US market, the midsize sedan Sonata and the small sedan Elantra. The plant's assembly lines operate as much as 20 hours per day during weekdays and on some Saturdays trying to keep up with high demand for Elantra and Sonata.

The Montgomery Advertiser newspaper in Alabama reported over the weekend that it is possible Hyundai may place a transmission plant in Alabama. Transmissions for the Elantra are shipped to the Montgomery plant now.

Hyundai opened its Alabama plant in 2005. It was followed by dozens of Korean auto parts suppliers that also have production plants in Alabama to serve the Hyundai factory.

Alabama is a "right to work" state, which helps companies there fend off efforts to unionise workers. The United Auto Workers, which represent production workers at the three major US automakers, has not been successful in convincing Hyundai workers to unionize the Alabama plant, which has about 2,600 workers.

Mississippi and South Carolina are also right to work states.

US April sales of Hyundai increased 40 per cent from April 2010, to 61,754 units, for a 4.8 per cent share of the US market. Through April, Hyundai's US sales rose 31 per cent to 204,374 units.

US April sales of Sonata were up 17 per cent. Sonata sales rose 46 per cent to 73,616 in 2011 through April.

US April sales of Elantra were up 129 per cent and up 89 per cent in 2011 through April.

Hyundai said the vehicles it sold in the United States in April averaged 36.2 miles per gallon, and that vehicles that can average 40 miles per gallon on the highway made up 34 per cent of its April sales, up from 25 per cent in April 2010.