Hyundai Motor affiliate Kia Motors has officially opened its first US car assembly plant, a US$1bn investment in Georgia which is building the redesigned Sorento SUV.
It will add the Hyundai Santa Fe in the second half of this year, according to the Korea Herald, and plans to raise output to full capacity of 300,000 units after 2012 following the addition of a new model. The production target for this year is 130,000 units, rising to 185,000 units next year. Adding US capacity will help Kia boost inventory as it hopes to take advantage of Toyota’s current recall plight which has damped customer confidence.
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The $1bn plant takes Kia’s annual production capacity outside of Korea to 1.03m units. The Slovakia plant has a production capacity of 300,000 units and Chinese JV facilities 430,000 units.
Kia is also hoping to create a synergy effect from the new plant’s proximity to parent Hyundai Motor’s facility in the neighbouring state of Alabama, which is located 134km away from KMMG.
Kia Motors Manufacturing Georgia (KMMG) will be responsible for producing transmissions that will be shared with Hyundai vehicles, and engines built at the Hyundai plant will be used in Kia models. This is similar to the arrangement in Europe where the Kia Slovak and newly-opened Hyundai Czech plants make driveline parts for each other and Kia builds both its own Sportage compact SUV and Hyundai’s ix35 (which replaced the Tucson).
Kia officials told the Herald that, although the distance between Hyundai Kia Automotive Group’s two US plants is greater than that between their European counterparts, better road conditions in the United States will allow the distance between the Georgia and Alabama plants to be covered in similar time as that required for travel between Czech and Slovakian plants. The group’s two European plants are located 53 miles (85km) apart.
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By GlobalDataThe plant at West Point employs around 1,200 people.
Kia Motors America sales chief Tom Loveless said US deliveries on a daily basis in February outpaced January. Combined Hyundai-Kia sales may have risen 25% in February from a year earlier according to research company Edmunds.com, which also said Toyota may be down 10%.
Loveless added: “The natural momentum we had prior to the trouble at Toyota is having is just continuing. We’ve fanned the flames with our products and that momentum does give us an opportunity to take market share.”
Kia’s US sales rose 9.8% last year, according to Autodata, even though light vehicle sales overall were off 21%.
Loveless said Kia is attracting totally new customers, more affluent than in the past buyers while lower prices remain pivotal for the company.
The new 2.2m sq ft plant is about 80 miles (129km) southwest of Atlanta, near Georgia’s border with Alabama. Federal, state, and local incentives totalled US$430m according to West Point mayor Drew Ferguson.
The factory has stamping, welding, painting and assembly facilities and also includes a transmission shop and a two-mile test track. Sorento production began on 16 November and sales started in the US in January.
Kia expects to double the plant workforce by the end of the year.
The factory was officially opened by Hyundai Group chairman Chung Mong Koo. Production lines are already running eight hours a day, five days, and that will rise to nine hours daily this month, according to human resources chief Randy Jackson.
“This plant’s economic impact on the state is estimated to be $4 billion a year, and in addition to 2,500 Kia jobs, suppliers will bring thousands more to our state and communities,” Georgia governor Sonny Perdue said.
Construction works started in October 2006.
In addition to ‘localising’ KMA’s R&D, manufacturing, sales and aftersales capabilities, the new plant appears to be giving Kia something of an emotional appeal to U.S. consumers.
Loveless said a some US consumers have began considering Kia as an option due to the fact that it is being produced in the United States.
As such, the company is playing the ‘made in the US’ card heavily with television advertisements and roadside billboards displaying phrases such as “proud to call Georgia home,” and “proudly built in Georgia by Georgians.”
