The Hyundai Motor Group announced Tuesday they are planning to invest $3.1 billion over the next five years in the United States. The South Korean group which also includes affiliate Kia Motors Corp., said the money will be spent on research and development of new technologies, upgrading existing facilities and potentially a new factory. Hyundai Motor President Chung Jin-haeng said "The U.S. market is crucial to our success as a global auto maker. We will continue to expand our presence in the key market. Our investment will also help the U.S. efforts to create more jobs." This statement comes as foreign and domestic auto manufacturers alike endure criticism from the incoming U.S. President. President-elect Donald Trump has consistently targeted auto manufacturing and warned them of a "border tax" if they continue, or expand production in Mexico and export into the United States. The tariff has been set as high as 35 per cent.
The U.S. auto market is the world's second-biggest after China, with almost 18 million units sold industry-wide last year. Although the Hyundai Motor Group has not been a direct target of Donald Trump, Japan's Toyota group and Germany's BMW, Daimler and Volkswagen have all been issued the 35 per cent tariff warning. The group's president has denied the plan was influence by Donald Trump but said their main goal was to improve demand for their vehicles under the new U.S. president. The $3.1 billion investment is nearly a 50 per cent increase from the $2.1 billion invested by the group over the last five year period.
They may potentially build a new U.S. factory to build high-margin, high-demand models such as a U.S. specific sports utility vehicle and a Genesis premium vehicle. Other auto makers currently produce highly profitable sports utility vehicles and trucks in the United States while they produce smaller, and less profitable vehicles in Mexico to save on wages. Hyundai and Kia each has their own respective factories in Montgomery, Alabama and West Point, Georgia in the United States but Kia also has one in Nuevo Leon, Mexico which began production last year. Kia had previously announced they were planning to produce 400,000 units a year at its Mexico plant, but that figure may be subjected to change, dependent on the incoming administration. Kia Motors Corp, saw its sales increase by 427 per cent last year since they entered the Mexican market two years ago.