Far Reaching Impact of Hyundai's Alabama Car Plant

The Korean daily, Han Kook Ilbo, has an interesting article on how the Hyundai Motor plant in Alabama will impact the company in Korea.

Stock prices of the Hyundai Automotive Group are likely to rise in sync over the next few months on the back of high profitability of a manufacturing plant in Montgomery, Alabama, which went into operation in May 2005.

The Alabama plant produces 73 units per hour, boasting higher profitability than that of the domestic plant in Asan (63 units of per hour).

Automobile research analysts say the overseas plant will have a significant effect on the market share of the groupÂ’s subsidiaries Hyundai Motor, Kia Motors and Hyundai Mobis in the U.S. market.

The expected increase in market share will push up the stock prices of the companies on the Korea Exchange (KRX), they predict.

The Alabama plant will see its financial accounts turn to surplus soon by passing the point of profit and loss next year, a Korean Sejong Securities analyst noted.

He expected a simultaneous rise in stock prices of the three affiliates thanks to the normalization of the production line there and newly unveiled cars.

A Hanwha Securities analyst also had a positive outlook on the automotive group, saying that more than half (58 percent) of Hyundai-Kia drivers want to buy other cars manufactured by the group.

Hyundai Motor shares rose by about 20,000 won ($19) over the past year to the 73,000-80,000 won level from 55,000-60,000 won level a year earlier.



Stocks of Hyundai Mobis are also attractive to investors as the price is hovering around the 85,000 won mark compared to the 54,000-63,000 won range in October 2004.



Markedly, the price of Kia Motors shares rose by about 70 percent from the range of 10,000-11,000 won to 17,000-19,000 won over the same period