From: Reuters
Published May 26, 2008 11:00 PM

Hyundai to produce small cars at Kia's U.S. plant

SEOUL (Reuters) - Hyundai Motor Group said on Tuesday the world's No. 6 auto maker plans to produce small sedans at a U.S. plant being built by subsidiary Kia Motors Corp <000270.KS>, as record-breaking oil prices spur more demand for such cars.

Hyundai Motor Co <005380.KS>, the group's main automaking subsidiary, produces the Sonata mid-sized sedan and the Santa Fe sport utility vehicle (SUV) in the United States at its Alabama factory.

Hyundai Motor sells the Elantra small sedan, and Kia offers the Spectra small car in the world's top auto market, but both are produced in South Korea.

"We have plans to have the Georgia plant produce small cars. We might have Hyundai products produced at the Georgia plant if the platform is common," Kim Dong-jin, Hyundai's vice chairman, was quoted as saying by a company spokeswoman.

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Kim was referring to Kia's first U.S. factory, which is expected to be completed by late 2009. "The market environment changed rapidly, like higher oil prices, environmental issues. We have a strong presence in the small-car segment," Kim also said, according to the spokeswoman.

The group halted plans to produce a pickup truck at Kia's U.S. factory amid concerns that surging oil prices will hit demand for the gas-guzzling vehicles.

Hyundai Motor has a plant in Alabama, which is producing 300,000 cars a year, and Kia is building a factory in Georgia with the same capacity.

Earlier this month, a Hyundai Motor Group official said Kia was considering manufacturing an SUV at its first U.S. factory.

Shares in Hyundai Motor fell 1.43 percent to 83,000 won as of 0210 GMT and Kia lost 1.6 percent to 12,300 won, both underperforming a 0.8 percent rise in the broader market <.KS11>.

(Reporting by Cheon Jong-woo; Editing by Ken Wills)

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