SEOUL South Korean automaker Kia Motors (000270.KS) on Wednesday denied a media report that it aims to build a new plant in the United States by 2014 to ease a capacity shortage that has put a brake on its stellar sales growth in a key market.
South Korean newspaper Financial News said on Wednesday that Hyundai Motor Group, which includes Kia Motors and affiliate Hyundai Motors (005380.KS), is in talks with Georgia state officials to construct the new plant, "KMMG 2" with an output capacity of as many as 150,000 vehicles a year, without identifying sources. Ground would be broken during April to June this year at the earliest, the report said.
Kia already has one factory in Georgia with a manufacturing capacity of 360,000 vehicles. That plant produces the Optima sedan, Sorento sport utility vehicle (SUV) and Hyundai's Santa Fe SUV. Hyundai also has one U.S. factory in Alabama, which makes the Sonata sedan and the Elantra compact.
"The report is all groundless," a Kia Motors spokesman said.
The report said that in 2010, Kia internally decided to build the new production facilities in Georgia, but held off the plan because of the global economic uncertainty.
Hyundai and Kia, which were the only major automakers to increase U.S. sales during the 2009 global economic downturn, have been grappling with falling U.S. sales and market share in recent months, crippled by stretched production capacity and rising competition from rivals such as Toyota Motor (7203.T).
The combined U.S. sales of Hyundai and Kia fell 3 percent from January to March this year from a year earlier, underperforming the recovering market.
Chung Mong-koo, chairman of Hyundai Motor Group, the world's fifth-biggest automaker, has slowed capacity addition in the past couple of years, aware that Toyota's massive recall crisis in 2009/10 was partly a result of the Japanese firm having aggressively grown capacity.
(Reporting by Hyunjoo Jin; editing by Keiron Henderson)