Friday, October 14, 2005

Hyundai-Kia The automaker is nudging the Hyundai brand upscale to distinguish it from its sister brand Kia Motors.

Hyundai to rev up four-cylinder output

At its Alabama plant, automaker joins trend to increase fuel efficiency because of high gas costs.

By Christine Tierney / The Detroit News

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SUPERIOR TOWNSHIP -- Hyundai Motor Co., responding to rising demand for fuel-efficient vehicles, plans to build more cars with four-cylinder engines at its new Alabama plant and fewer with thirstier six-cylinder motors.

Hyundai's decision marks the second adjustment announced by an Asian automaker to skew output toward more fuel-efficient vehicles because of high gas prices.

Two weeks ago, Nissan Motor Co. said it had stepped up North American production of cars and slowed output of light trucks.

"The fuel price is really resonating," Robert Cosmai, president and CEO of Hyundai Motor America, said at the formal opening of the $48 million Hyundai-Kia America Technical Center in Superior Township.

About 60 percent of the midsize Sonata cars built at Hyundai's Birmingham, Ala., plant now have six-cylinder engines, but cars with four-cylinder engines "will be at least 50 percent," Cosmai said.

Rising gas prices worldwide have boosted demand for its small Accent and Elantra cars and supplies of those models, both built in South Korea, are tight, he added.

Hyundai has boosted discounts on larger vehicles, such as its Santa Fe SUV, launched in 2000. So far this year, Hyundai vehicle sales are up 9.6 percent. Following the April launch of the Sonata, it will roll out a bigger sedan, the Azera, and an Accent compact in December.

The automaker is nudging the Hyundai brand upscale to distinguish it from its sister brand Kia Motors. "Our understanding is that Kia would be their lower-end provider," said Global Insight analyst Rebecca Lindland.

But analysts worry that Hyundai may lose customers if it tries to move the brand up too quickly.

Cosmai said he would press Hyundai's top executives in Seoul "to shift production to accommodate market demand."

The automaker recently dropped plans to add a minivan to the Hyundai range, as Kia has one.

But Cosmai suggested that the subject wasn't closed. "We will always keep our conversation open with our parent company about what segments we need to be in, and we think we do need to be in minivans," he said.

You can reach Christine Tierney at (313) 222-1463 or ctierney@ detnews.com.