Capacity Unconstrained: Kia Plans Mexico Factory

Hyundai might benefit from Kia’s plant too.

Kia Rio hatchback
Kia Rio 5-door hatchback.

The Hyundai Kia Automotive Group is the fourth largest automotive manufacturer in the world with the Hyundai brand taking leadership worldwide. Kia, however, has been showing strength in several markets including in the US where it has been gaining on Hyundai.

Hyundai Kia Capacity Constraints

Sales for both brands have been held down in the past year as capacity constraints weigh in. Both manufacturers have just one North American plant with Hyundai’s based in Montgomery, Alabama, and Kia’s plant in Georgia. That West Point, Georgia, plant also builds the Hyundai Santa Fe, a model that Hyundai moved from Alabama soon after the plant opened.

Hyundai and Kia have been operating under an informal self-imposed capacity constraint as both US manufacturing plants operate at full tilt across three work shifts. Both companies also import cars from South Korea, but additional North American capacity is still needed.

Hyundai Accent
Hyundai Accent five-door hatchback.

Kia Mexico Manufacturing

On June 2, 2014, Reuters reported that Kia Motors will build a new plant in Monterey, Mexico. That plant will build two small vehicles including perhaps the Kia Forte and Kia Rio. With a capacity of 300,000 units per year, it might also build a Hyundai product such as its compact Elantra. That would free up space for Hyundai to expand Sonata production, its popular midsize sedan that has been updated for 2015.

Hyundai and Kia had been rumored to be looking at new locations in the southern United States including the former GM plant near Shreveport, Louisiana, the future home to the three-wheeled Elio Motors trike. The Korean automakers, however, prefer to build its factories from the ground up instead of taking over existing facilities.

The Hyundai-Kia juggernaut has been increasing its global and US market share steadily for more than a decade. A new factory is planned in China and the Mexican factory, if built, would take approximately 21 months to complete. Thus, production would not begin before spring 2016 even if groundbreaking were held today. Likely, Hyundai and Kia will lose market share in 2016 without the expanded capacity notes Reuters.

2014 Kia Forte

Hyundai Kia Pricing Advantage

Producing cars in Mexico would enable the Korean automakers to gain some stability as higher labor costs and currency erosion has made it difficult to maintain a pricing advantage. Both brands have been known for pricing their vehicles about 5 percent below competitor’s prices and including more standard content. With competing manufacturers also turning to Mexico to find low-cost labor, that pricing advantage has been slipping away. Mexican built cars, incidentally, come by way of NAFTA and are included in North American build capacity.

The Kia brand has enjoyed strong growth in the past few years as it taps Hyundai platforms and powertrains to build new models of its own. For instance, the Kia Optima is based on the same platform underpinning the Hyundai Sonata and the Kia K900 is a derivative of the Hyundai Equus.

Hyundai Sonata
Turbocharged: Hyundai Sonata midsize sedan.

Auto Trends: Hyundai Kia Sales

Both Kia and Hyundai posted record US sales for May 2014.

Kia enjoyed a 14.8 percent year-over-year increase, selling 60,087 units. Its best-selling Optima sedan continues to lead with 16,843 unit sold for the month. Other strong sellers included its Soul multi purpose vehicle at 15,606 units and its Sorento crossover utility vehicle with 10,548 units sold.

Hyundai sales rose by 3.7 percent to 70,907 units. The company’s Elantra compact continues to lead, with 21,867 units sold followed by the Sonata at 20,404 models distributed. In third place was the Santa Fe crossover at 10,638 units. This CUV is also Hyundai’s fastest growing model.

Together, Hyundai and Kia are battling Nissan for sixth place in US sales. GM is on top followed by Ford, Toyota, Chrysler and Honda.

Jeep Paces Strong May 2014 US Auto Sales

May 2014 sales were the best we’ve seen in years.

2014 Jeep Grand Cherokee Limited
Jeep sales continue to propel Fiat Chrysler.

It was another strong month for US auto sales with Jeep leading the way. In May 2014, Jeep sales rose by 58 percent over May 2013, for astounding year-over-year gains. Moreover, it was the Jeep’s third consecutive record-breaking month for a brand that is also actively going global.

Jeep sales finished at 70,203 units, nearly equaling what the entire Hyundai brand experienced for the month. Hyundai also set an all-time US sales record in May. The Korean automaker’s next-generation Genesis luxury sedan and mainstream Sonata sedan are now in showrooms.

Wrangler once again led sales and was followed by the Grand Cherokee. The difference maker for Jeep was its midsize Cherokee, a new model that came in at 15,992 units sold. The Jeep Cherokee has exceeded sales expectations and delivers a model that is unusually robust off-road for a crossover utility vehicle. It was an Auto Trends featured model in an April 2014 review that demonstrated its mudding characteristics. Jeep’s other two models, the Patriot and Compass, also fared quite well for the month.

2014 Ford Fusion PHEV
Ford Fusion sales hit a record for May 2014.

Ford Edges Forward

Ford sales were nothing to write home about, but they did increase by 3 percent, largely on the strength of two Ford products: Fusion and Escape as well as the Lincoln MKZ. Lincoln dealers moved 3,714 MKZs, a model that is up by 42 percent for the year. And with the MKC crossover arriving in Lincoln showrooms now, Ford’s struggling luxury brand should see sales increase well above its current 20.9 percent annual rate.

Nissan Group sales rose by 18.8 percent for the month, beating the industry average. Notably, the company’s Infiniti division shined as sales rose by 31.4 percent. Infiniti’s increase came on demand for its all-new Q50 sedan. In May, Infiniti moved 2,938 units.

The Nissan brand was led by the Altima as sales for its midsize star broke a record, coming in at 36,053 units for the fastest increase of any model in its segment. Strong sales of its compact Sentra and crossover Rogue also propelled Nissan.

GM’s hold on the top spot of the US market remains strong despite a slough of recalls that have threatened the company’s viability. The automaker reported 284,694 units sold, for its best month since August 2008. It was in Sept. 2008 when Lehman Brothers collapsed and the economy was plunged into the greatest recession of our time.

Chevrolet led all brands, rising by 14.2 percent for the month. Among its significant gainers were its compact Cruze sedan with 32,393 units sold and its Camaro sports model with sales of 10,340 units. Buick also registered double-digit increases; Cadillac and GMC sales came in on the plus side for the month as well.

2014 Toyota Corolla
May 2014 Corolla and Camry sales paced Toyota.

Toyota Camry Sales Surge

Toyota rode a 12.6 sales increase to reach its highest sales in nearly eight years. The automaker reported strong demand for four models including its midsize Camry, the best selling car in America. Camry sales came in at 49,584 units followed by the Corolla at 36,611 units sold. The Prius at 26,793 units and the RAV4 at 23,465 sales followed.

Volkswagen continues to struggle in the US, one of its weaker global markets. While its Audi division continues to succeed, the eponymous Volkswagen brand is struggling. May sales fell by 11.5 percent with only the Jetta SportWagen and Tiguan seeing increases.

Kia, Honda, Subaru Shine

Kia continues to close the gap with its corporate cousin, Hyundai, selling a recored 60,087 units last month. Its Optima, Soul and Sorento models led the pack as has been the case for much of the last year.

American Honda reported a 9 percent sales increase for the month. The company sold just over 39,000 Accords, more than 36,000 Civics and 32,430 CR-Vs. Its Acura division, however gained just 2.2 percent.

Among the three major German makes, BMW outpaced Mercedes-Benz for the month, cutting its rival’s lead for the year. Audi came in with 16,601 units sold, outpacing the rate of its larger German rivals.

Subaru continues to surge, reporting its 30th consecutive month of year-over-year sales growth. Forester sales rose by 40 percent for the month while the WRX/STI saw a 62 percent increase.

2015 Subaru WRX
Subie May 2014 sales broke a record. The WRX did its part.

May 2014 Auto Sales

For the month, US auto sales climbed by 11.4 percent, beating most analyst’s projections. That’s just over 1.6 million units for May 2014, the best sales month (seasonally adjusted) since July 2006.


See AlsoJeep Wrangler: There’s Only One

Photos copyright Auto Trends Magazine.

Downward Displacement: Four Cylinders for Porsche?

Small engines to deliver big power for future Porsche models.

Flathead sixes and Porsches go together. At least they have so for decades. From time to time rumors that a V-6 might be used have surfaced, but quickly have been disputed by experts if not dismissed outright by Porsche itself.

What likely won’t be quickly laid to rest are rumors that a family of horizontally-opposed four-cylinder engines are in the works, with Britain’s Car magazine insisting as much in a story that they ran on Monday.

Porsche Cayman S.
Flathead fours may power future Porsche Cayman models.

Flathead Fours Rumored

Car says that three four-cylinder flathead engines are in the works, displacing at 1.6, 2.0 and 2.5 liters. However, only the two larger fours would be used initially — in the Boxster and Cayman — supplementing, not replacing, the currently available sixes that customers love and prize.

A 1.6-liter four, if built, would power a new Porsche roadster to slot at the bottom of Porsche’s model hierarchy. Over the past decade, Porsche has been continually expanding its product line, bringing the Macan sport utility vehicle to the market this summer and it is expected to follow that up with one or two new models over the next few years.

Car correctly pointed out that Subaru is the only manufacturer that produces flathead fours. Unlike Subaru’s turbo-free BRZ, Porsche will make good use of turbochargers and direct injection to squeeze much power out of the smaller footprints.

Porsche 911 Carrera S
Smaller engines are not destined for the 911, at least not yet.

Horsepower and Torque

Indeed, Car also got very specific about the spec data that it says it has seen for these engines, with the 1.6-liter delivering 210 bhp, the 2.0-liter coming in at 266 bhp and the big four rated at 386 bhp. BHP is brake horsepower, a measurement of horsepower delivered at the engine crankshaft. Those numbers are adjusted slightly to our measurements, calculated by using a dynamometer.

By the way, Car estimates that the 2.0 liter will make 295 foot-pounds of torque and the larger four will bang out 347 foot-pounds. Smaller engines, but still lots of power. Figure that a 6-speed manual would be standard; a 7-speed PDK transmission would be available.

Smaller Footprint, Ample Power

The switch to smaller engines comes as tighter fuel requirements advance in the United States and tax considerations weigh in across Europe. Consumer preference for smaller engines is a consideration too although for rabid Porsche fans only sixes will do. That leaves an untold number of consumers who won’t care or at least won’t be put off by the smaller engines.

The trend to smaller engines has been underway for a number of years with V-8s disappearing except in the largest vehicles such as pickup trucks and full-size models including sedans. Making use of direct injection, variable valve lift technology and turbochargers has made it possible for smaller engines to deliver comparable power within a compressed footprint.

Light Weight Materials

Further weight savings through the wider use of lighter materials will enable manufacturers to deliver new models with comparable overall performance to heavier models. Ford, for example, is using aluminum to shed weight from its 2015 F-150 truck while other manufacturers are using high-strength steel and carbon fiber composites to shave weight.


Additional Porsche Articles

Emotive: Porsche 911 Carrera 4S

Return to Porsche By Design: Seducing Speed

Happy Holidays: Enjoy the Porsche Cayman S Eye Candy

Porsche Macan Set for Los Angeles Introduction


Photos copyright Auto Trends Magazine.