What Hyundai’s moves in 2019 mean for Alabama (BY AL.COM)


Hyundai’s Santa Fe SUV is made in Montgomery. (Hyundai)

Hyundai said this week that tariff uncertainty and a sluggish U.S. market are some of the reasons behind slower sales over the last year.

But the Korean automaker – along with Kia – is planning for a 3 percent sales increase in 2019, according to Reuters. In 2018 the two companies – which form the fifth-largest automaker globally – fell short of their sales target for the fourth straight year. Together, they sold 7.399 million in 2018, just shy of their target of 7.55 million vehicles.

Market projections have global auto production falling 1 percent this year, the first drop in nine years.

What does that mean for Hyundai’s operations in Alabama? Reuters reported the group plans to launch 13 new or revamped models in 2019, including a premium Genesis SUV and the Sonata sedan. Hyundai’s Montgomery plant produces the Sonata, as well as the Elantra and redesigned Santa Fe SUV, which began production last year.

It’s unclear just yet how this might affect Montgomery, especially in light of comments made last November by Hyundai Motor Co. CEO Wonhee Lee to Automotive News. In an interview, Lee said he doesn’t see any need to expand the production capacity for the Montgomery plant in the short-term.

However, he said the plant could be expanded to add a planned next-generation Tucson, a compact pickup, and a Santa Cruz semi-pickup truck, which is a derivative.

He said the U.S. plant currently has a capacity of 390,000 vehicles a year.

“We can only produce three models at our U.S. plant. Within 390,000 total production capacity, if we want to produce four or five models, we need additional investment to modify our production line. If we add pickup production in the U.S. plant, we have to invest a significant amount of money,” he said.

Lee said he doesn’t expect Hyundai to need to expand production for “right now.” But the Tuscon could arrive in the U.S. market by 2021.

Hyundai has already made investment in the Montgomery plant over the past year. Last May, it began a $388 million technology upgrade in an engine shop and added engine head machining capabilities. That was the largest expansion since the plant began production in 2005. The new engine head machining facility was projected to be operational by the middle of this year, when Hyundai will begin producing Theta III engines for Sonata sedans and Santa Fe crossovers.

The company’s total investment so far in the Montgomery facility has been $1.8 billion, with about 2,700 full-time employees and 500 part-timers working there.

All of Alabama’s auto manufacturers – Mercedes-Benz, Honda and Hyundai – announced expansions last year, as well as the beginning of construction on the $1.6 billion Mazda Toyota plant in Huntsville.