Hyundai to make Santa Fe Sport SUV at Alabama plant

Fri Jan 8, 2016 12:12am EST
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By Bernie Woodall and Hyunjoo Jin

DETROIT/ SEOUL (Reuters) - Hyundai Motor Co (005380.KS: Quote) said on Thursday it will start making its Santa Fe Sport at its Montgomery, Alabama, factory in early summer to increase supply for the quick-growing crossover sport utility vehicle (SUV) segment of the U.S. market.

The announcement comes as the South Korean automaker grapples with stagnating sales of its mainstay sedans such as the Sonata as low oil prices drive sales of petrol-guzzling SUVs and trucks.

The Santa Fe Sport, a five-passenger crossover, will be one of three models made at the plant, joining the Sonata and Elantra sedans.

The two-row Santa Fe Sport production facility will supplement production of the model at a factory in the state of Georgia operated by corporate sibling Kia Motors Corp (000270.KS: Quote), which makes Kia's Sorento SUVs and Optima sedans.

"The Santa Fe Sport is likely to replace some Sonata production as sedan demand is not strong," said analyst Cho Soo-hong at NH Investment & Securities.

Hyundai plans to build about 30,000 Santa Fe Sport vehicles in Alabama from June through December, a person with knowledge of the matter told Reuters.

The SUV's output at the Kia factory is likely to be 105,000 vehicles this year from 114,000 last year, the person said on condition of anonymity because the information is confidential.

Hyundai said production targets for the Sonata, Elantra and Santa Fe Sport will be determined in coming months, and that the Alabama plant's capacity will remain at 400,000 vehicles a year.   Continued...

An employee sits in front of the logo of Hyundai Motor Co. at its dealership in Seoul, South Korea, October 22, 2015.  REUTERS/Kim Hong-Ji