Could Hyundai’s Alabama Plant Expansion Be for Santa Cruz Production?
Acknowledgement is the first step to recovery.
Hyundai has made that first movement toward improving its situation. The automaker’s US executives have publicly acknowledged their projected limited financial growth in the coming years based on their relative absence from the truck/SUV segments. Currently, because consumers are leaning towards vehicles with low fuel efficiency due to cheap gas prices (we don’t endorse that reasoning), Hyundai’s sedan sales are declining.
What is Hyundai going to do about this predicament?
Rumor is that the company’s existing Alabama plant could be undergoing an extension to increase SUV production. Plus, this could be Hyundai’s way of preparing for the production of the Santa Cruz crossover concept.
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Could the Alabama Plant Be Producing the Hyundai Santa Cruz?
Because sales of the Elantra and Sonata–consistently the company’s two most successful models, making up a combined 56.5% of total US sales–are slowing, Hyundai will need to pick up the slack in another segment. In order to draw more consumers, it’s likely the automaker will be making a move toward expanding SUV production.
Multiple individuals familiar with Hyundai’s plans told Reuters that the automaker is in the final stages of negotiations with Alabama officials. “It’s a new assembly line right next to the current Alabama line. State of Alabama is negotiating final terms,” stated one source who knew about Hyundai’s discussions concerning tax breaks and incentives with Alabama. At this point, no final decision has been confirmed.
At the same time, Yonhap News Agency in South Korea announced that Hyundai’s Alabama plant would be building a second production line in a $1.7 billion development plan. The agency estimates that the new facility would have an annual capacity of 300,000 vehicles and would start SUV production in 2017. This rumor also follows the urging of many head executives and analysts for Hyundai in Korea who beseech the US branch to expand production capacity and build a second plant.
The Elantra and Sonata are currently being built at the Alabama plant, while the Santa Fe SUV is manufactured in Kia’s Georgia facility. An expansion is definitely good news, as it would mean more jobs for Hyundai, and increased business for suppliers in the southeast United States.
The logical guess concerning which model Hyundai will be building on a second production line would be the Santa Cruz crossover concept, which debuted at the North American International Auto Show. The truck-SUV hybrid was specifically designed to boost the brand’s presence in both segments. However, others speculate that the company could instead be preparing to produce the revamped version of the Tucson, which is currently imported from Korea.
The only official word from Hyundai is a spokesperson who stated–for the record–that the automaker has “no plans at this stage” to increase production in the United States. How quickly those “plans” could change is anyone’s guess.
News Source: Reuters