Hyundai Poised to Expand U.S. Factory

Hyundai Motor Co. will add new capacity to make SUV/crossovers near its existing auto plant in Montgomery, Ala., according to media reports.

South Korea's Yonhap News Agency says construction will begin later this year on the facility, which will open in 2017 with capacity to make 300,000 vehicles per year. Sources tell Reuters that Hyundai is in final negotiations with the state of Alabama. The company insists no decision has been made about expanding capacity.

The Montgomery factory currently makes Elantra and Sonata sedans. Hyundai imports Tucson SUVs from South Korea and gets its Santa Fe SUVs from affiliate Kia Motors Corp.'s factory in West Point, Ga.

Hyundai-Kia Chairman Chung Mong-koo slapped a moratorium on expansion by both carmakers in 2012. But analysts agree both companies need more capacity in North America to keep pace with demand.

Kia plans to open a factory later this year in Pesqueria, Mexico, to make small vehicles. The $1 billion facility reportedly will have capacity to produce 300,000 cars per year.