HMGMA will start making Sportage Hybrids as Hyundai shifts the plant from a pure EV focus to mixed production
HMGMA (Source = Hyundai Motor)
Hyundai Motor Group is setting out to recover profitability by proactively utilizing its new US plant, Hyundai Motor Group Metaplant America (HMGMA), as a hybrid electric vehicle production base. The plan is to maximize local responsiveness by flexibly modifying the existing strategy, which originally designed the facility as a dedicated electric vehicle plant, in line with market changes.
According to the finished vehicle industry on May 21, HMGMA will soon begin full-scale production of Kia’s popular model, the Sportage Hybrid. Although the plant was initially built for the purpose of targeting the pure electric vehicle market, the company decided to transition to a mixed hybrid production system in preparation for the expected slowdown in electric vehicle growth and tariff barriers following the inauguration of the second Trump administration.
In accordance with the increase in production volume, workforce management and facility investments will also be significantly expanded. Hyundai Motor plans to introduce a two-shift night work system starting in September, increasing the workforce from the current level of 4,000 to 6,000 by the end of the year, and further expanding it to 8,500 in the future. The strategy also involves expanding the annual production capacity from the existing 300,000 units to 500,000 units, while minimizing the tariff burden by nearly doubling the localization rate, which is currently at the 40% level.
The tariff cost, which was pointed out as the main cause of the deterioration in first-quarter performance, lies behind Hyundai Motor Group’s move to increase the proportion of local production. As the United States imposed high tariffs on imported automobiles, Hyundai Motor and Kia spent 860 billion won ($661.54 million) and 755 billion won ($580.77 million) on tariffs in the first quarter alone, respectively. As a result, both companies suffered a blow as their operating profits plummeted by about 20 to 30% compared to the same period of the previous year, although their sales increased slightly.
The industry is paying attention to the steep growth trend of hybrid vehicles in the United States. Market research firm S&P Global Mobility predicted that the market share of hybrid cars in the United States this year will reach 14 to 16%, nearly doubling compared to the previous year. Hyundai Motor Group plans to defend its market share by significantly raising the operation rate of HMGMA from the current 38.2% in response to these changes in demand.
The financial and securities sectors analyze that this revision of the production strategy will become a core driver for performance improvement in the second half of the year. FnGuide forecasted that the operating profits of Hyundai Motor and Kia will show a declining trend until the second quarter before turning to an increasing trend compared to the previous year starting in the third quarter. The dominant analysis is that profitability recovery is sufficiently possible if the impact of tariffs is reduced through the expansion of local production and an improvement in the sales mix is achieved.
Michael Herh
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