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Kia plan puts heavy pressure on Ga. factory

Automotive News reports on Kia manufacturing in the U.S.

How do you get a plant that appears to be at full capacity to turn out 50 percent more vehicles?

That will be the next rabbit out of the hat for red-hot Kia and Hyundai.

Kia's plan to build Optima sedans in West Point, Ga., this fall will put a mighty strain on production capacity for both Kia and Hyundai, just as their sales are exploding. Neither will discuss plans to add a new U.S. assembly plant or expand an existing one. But just do the math.

Kia says its West Point factory, which is less than two years old, can build 300,000 vehicles a year. But it's on track to go well over that in 2011.

And beginning in October Kia plans to produce 150,000 Optimas annually at the plant. It will be the sole production source for the mid-size sedan in the United States.

The plant already is jammed because last October corporate cousin Hyundai shifted production of the Santa Fe crossover there from Montgomery, Ala. Hyundai needed to boost Sonata output in Montgomery and make room for the Elantra that went into production in Alabama in November.

Kia already is running two shifts each weekday and at least one Saturday shift a month, building the Sorento crossover and Hyundai's Santa Fe. A third shift will be added when the Optima starts production, spokeswoman Corinne Hodges said.

Hodges would not say what percentage of West Point's capacity is being used now, but the plant appears to be running close to capacity.

Through April, it built 54,082 Sorentos and 46,881 Santa Fes. If that pace continues for the rest of the year, Kia's plant will exceed 300,000 units in 2011, even without the Optima.

Tracy Handler, an analyst at IHS Automotive, expects Kia to reduce crossover production to make way for modest first-year production of the Optima. "With gas prices going up, they could probably see a little bit of a dial-back on Sorento and Santa Fe," she said.

Hyundai's Montgomery plant is building 1,360 cars a day on two 10-hour shifts, five days a week, and one eight-hour shift every other Saturday. "We're at capacity," said Hyundai spokesman Robert Burns.

Both Hyundai and Kia had record U.S. sales in 2010, and neither is slowing down. Hyundai sales are up 31 percent through April, and Kia has soared 42 percent. Together, Hyundai and Kia accounted for nearly 10 percent of the U.S. market last month, outselling all European brands combined for the first time.

But, for now, officials aren't talking about adding U.S. capacity. Hyundai spokesman Chris Hosford said the automaker has no current plans to build another U.S. plant or to expand in Alabama. "We feel confident that there will be sufficient production for the Santa Fe during the remainder of the year," he said.

The Santa Fe will be redesigned by the end of this year. He declined to talk about production plans for the new version.

"It's too early to say," Hosford said. "We're not discussing issues surrounding the redesign at this time."

(Source: Automotive News)