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Kia Motors denies media report of new car factory

SEOUL (Reuters) - South Korean automaker Kia Motors <000270.KS> denied on Wednesday a media report that it aims to build a new plant in the United States by 2014 to ease a capacity shortage that has put a brake on its stellar sales growth in a key market.

South Korean newspaper Financial News said on Wednesday that Hyundai Motor Group, which includes Kia Motors and affiliate Hyundai Motors <005380.KS>, is in talks with Georgia state officials to construct the new plant, "KMMG 2" with an output capacity of as many as 150,000 vehicles a year, without identifying its sources. Ground would be broken during April to June this year at the earliest, the report said.

Kia already has one factory in West Point, Georgia, with a manufacturing capacity of 360,000 vehicles. That plant produces the Optima sedan, Sorento sport utility vehicle (SUV) and Hyundai's Santa Fe SUV over three work shifts, and employs more than 3,000 people. Hyundai also has a U.S. factory in Alabama, which makes the Sonata sedan and the Elantra compact.

"The report is all groundless," a Kia Motors spokesman said.

A spokeswoman for the Georgia department of economic development said it had no active project with Kia, but would support any expansion. West Point Mayor Drew Ferguson said he did not know of any such plans.

Last November, Kia said it would invest $1.6 billion over 16 years on new machinery for the Georgia plant.

The media report on Wednesday said that in 2010, Kia internally decided to build the new production facilities in Georgia, but held off the plan because of the global economic uncertainty.

Hyundai and Kia, which were the only major automakers to increase U.S. sales during the global economic downturn, have been grappling with falling U.S. sales and market share in recent months, crippled by stretched production capacity and rising competition from rivals such as Toyota Motor <7203.T>.

The combined U.S. sales of Hyundai and Kia fell 3 percent from January to March this year from a year earlier, underperforming the recovering market. A senior Kia U.S. sales executive said in January that the automaker wants to boost its U.S. market share this year.

Chung Mong-koo, chairman of Hyundai Motor Group, the world's fifth-biggest automaker, has slowed capacity addition in the past couple of years, aware that Toyota's massive recall crisis in 2009/10 was partly a result of aggressive capacity growth by the Japanese firm.

(Reporting by Hyunjoo Jin in Seoul, additional reporting by Ben Klayman in Detroit; editing by Keiron Henderson)

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