- The Washington Times - Friday, May 20, 2005

MONTGOMERY, Ala. (Agence France-Presse) — Hyundai opened its first U.S. factory yesterday, in a sign of the growing importance of the South Korean automaker in the North American market.

“This new manufacturing facility reaffirms Hyundai’s commitment toward investing in the U.S. economy, as well as its commitment toward U.S. consumers,” Chung Mong-Koo, chairman of Hyundai Motor Group, said at the opening of the facility in Montgomery, Ala.

“American consumers have recognized Hyundai’s quality, and this plant will enable us to better serve them,” Mr. Chung said.

He was joined by Alabama Gov. Bob Riley, former President George H.W. Bush and other local officials for the opening of the $1.1 billion plant, which has been under construction since 2002.

The plant employs more than 2,000 people and has agreements with 64 U.S. suppliers that are expected to create 5,500 additional jobs.

The Montgomery plant has started the assembly of Hyundai Sonata sedans and has the capacity to produce 300,000 vehicles per year. It also builds a new 3.3-liter V-6 engine.

Plant production director John Kelson said the facility is producing about 200 vehicles a day and may end the year at a level of about 80,000.

But “we’re going to let quality determine production levels,” he said.

“Every customer that’s going to buy those vehicles doesn’t care about 80,000, they care about one.”

The plant’s opening marks a milestone for the automaker that had been riddled by quality concerns in its first years in the U.S. market but has made a stunning comeback.

It is now ranked seventh in the world and aims to move higher.

The Hyundai nameplate alone had a 2.5 percent market share in United States last month, having overtaken Japanese manufacturers including Mitsubishi and Isuzu, as well as European names such as Volkswagen, BMW and Mercedes-Benz, according to figures from Autodata Corp.

With its affiliate Kia, Hyundai has a U.S. market share of about 4 percent and is growing fast.

Hyundai’s rankings have been steadily growing in key quality surveys.

“We’re never satisfied when it comes to quality,” said Bob Cosmai, president of Hyundai North America. “Being in the top 10 of 36 nameplates is pretty good but we can do better,” he said, adding that Hyundai aims to be the top-rated automaker.

The Sonata sedan, designed for the U.S. market, saw its sales jump 30 percent for 2004 to a total of 107,189. It is big enough to be classified as a large car but is sold at a lower price than most rivals, making it a key driver for the South Korean firm.

The company plans to spend $100 million, three times more than in any previous campaign, to advertise the new Sonata sedan starting Memorial Day weekend.

“The Sonata is the most important launch in our history,” Mr. Cosmai told Bloomberg News. “The car is very competitive with anything that Honda, Toyota or Nissan make right now.”

After starting in the compact-car segment, Hyundai and Kia have expanded their offerings and now offer a range of vehicles including minivans and sport utility vehicles.

The company, South Korea’s largest automaker, sold 400,780 vehicles worldwide in the January-March period, up 10.2 percent from a year ago, including 281,699 cars that were exported, up 19.8 percent. Domestic sales fell 7.5 percent to 119,081.

The company has been aggressively tapping overseas markets to make up for poor domestic sales. But Mr. Chung has said there are no plans for an additional U.S. plant.

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