Hyundai Motor to produce new Avante in US

Hyundai Motor plans to expand its production capacity in the U.S. by adding a compact model to a production line. 

A Hyundai spokesman said Monday that the automaker will begin producing the new Avante at its Alabama plant, which currently produces the Sonata sedan and Santa Fe SUV, in April 2011, with production volume of up to 150,000 units per year.

Production of the new Santa Fe, due to hit the market in the middle of next year, will move to a plant in Georgia, operated by Hyundai's sister company Kia Motors.

So far Hyundai has produced only the Sonata sedan and the Santa Fe in the U.S. Its compact models sold in the U.S. such as the Avante and Verna have all been produced in Korea.

The move will drastically reduce exports of Hyundai's Korean plants. Last year the company shipped 103,000 units of the Avante to the U.S., accounting for half of its overall U.S. exports.

Hyundai apparently believes that producing the Avante in the U.S. plant will be more cost effective and boost production efficiency and product quality.

Hyundai will install engines produced in China in the U.S.-made Avante for the first time. It says the use of Chinese-made engines shows that it regards China not only as a market but also an exporting base.

The U.S.-made Avante will use Hyundai's newly developed Nu engine produced by its auto parts affiliate Hyundai-Wia, which is building a plant in Riahzo, China to prepare for U.S. exports. The plant is slated to be completed by the end of July this year and will produce 150,000 Nu engines a year.