Hyundai Motor and Kia Motors reportedly have already revised the local production system entirely before the amendment to the Korea-US free trade agreement (FTA) amid growing US protectionism.
On May 5, Hyundai Motor allocated 70,000 units of the next Tucson model and 60,000 units of the Tucson pickup truck to its Alabama plant in the US in order to mass produce them in 2021. Hyundai Motor originally planned to produce 556,000 units of three models -- the Avante, Sonata and Santa Fe by 2020, but the two models were newly added. Accordingly, the output of Hyundai Motor's US plant will increase roughly 20% to 666,000 in 2021. This is because Hyundai Motor will add two Tucson models and instead reduce production of Avante by 20,000 units. As of last year, the production capacity of this plant was about 370,000 units.
Kia Motors added another production model to its US plant in Georgia with the aim of rolling them out in 2020. In the first place, the automaker decided to produce the medium-sized SUV 'ON (project name)' and the next models of the K5 and Sorento. But Kia Motors decided to add Soul to them. Accordingly, the production capacity of the Georgia plant is expected to climb from 340,000 units in 2017 to 370,000 units in 2020. The plant will produce 140,000 units of the Sorento, 120,000 units of the K5, 60,000 units of the ON, and 50,000 units of the Soul.
Accordingly, Hyundai and Kia are expected to build a "one million-unit production system" at their US factories around 2021. The automobile industry is paying attention to the fact that Hyundai Motor already decided to produce Tucson pickup trucks before a briefing of the results of the FTA negotiations last month. This is because under the previous agreement, the United States decided to completely eliminate a 25% tariff on pickup trucks by 2021, but the agreement made this time extended the period by 20 years until 2041.
It is expected that the action will empower Hyundai and Kia to respond to President Donald Trump's demand that foreign companies expand investment in the US. The Hyundai Motor Group announced a plan to invest US$3.1 billion in the US in the five years as Trump took office in January of last year.
In the meantime, Hyundai's Alabama plant will cease production of the Santa Fe at Kia's Georgia plant in May. In addition, the Kia Georgia plant decided not to produce alternative models for the Santa Fe until the end of the year. Hyundai’s Alabama plant produced 58,451 units of the Santa Fe and asked Kia's Georgia plant to produce 73,975 units of the Santa Fe last year. This year, Kia's Georgia plant produced 7,220 units of the Santa Fe in January and February. However, if Santa Fe production orders stop in May, the Kia Georgia plant is expected to prune production by at least 60,000 units from last year.