Hyundai mulls US factory as car makers respond to Trump

The Hyundai Motor Group said it plans to lift US investment by 50% to $3.1bn over five years and may build a new plant there — the latest vehicle maker to announce fresh spending after president-elect Donald Trump threatened to tax imports.

Under pressure to deliver on campaign promises to revive US industrial jobs, Trump has warned of a 35% tax on vehicles imported from Mexico, where many manufacturers have taken advantage of the country’s lower labour costs.

Toyota, Ford and Fiat Chrysler have recently unveiled new US investment plans. General Motors was expected to announce as early as Tuesday that it would invest about $1bn in its US factories, a person briefed on the matter said, while German makers have also come under fire from Trump.

Hyundai and Kia have not been directly criticised by Trump but they may have felt vulnerable because among major brands, they have one of the lowest ratios of cars built in the US to cars sold.

Chung Jin-haeng, president of the group, denied the plan was due to pressure from Trump, saying that a new US factory would depend on whether demand improved under the next US administration. “We have to be committed to the US market — a strategically important market which can make or break our global success,” he said.

The South Korean group planned to spend the $3.1bn to retool existing factories in the US and boost research on selfdriving cars, artificial intelligence and other future technologies, Chung said.

He said the group was considering a new US factory to build high-margin, highdemand models. That would come on top of Hyundai’s factory in Montgomery, Alabama, and a Kia plant in West Point, Georgia.

Ko Tae-bong, an auto analyst at Hi Investment & Securities, said that while the increased investment would please Trump, it would be risky move to invest in a new US plant.

“This could be a trap for Hyundai,” he said, citing peaking US market demand and the group’s sagging global sales.

Kia also has a plant in Nuevo Leon, Mexico. But Chung said the group was “agonising” over the Mexico plant.