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Asian Makers Expand Capacity in USA

On March 13, 2006 Asian automakers announced almost $1.5 billion in new investments in production capacity in the United States.

Kia Announces West Point, Georgia Plant: The most major announcement was that Kia Motors Corporation is investing $1.2 billion in a 300,000 unit capacity greenfield assembly plant in West Point, Georgia. While Kia did not announce what products it will build in the plant it is known that they have been itching to sell a pickup truck in the American market and, to avoid the 25% chicken tax, a pickup has to be built somewhere in NAFTA. We are guessing this will need to be a two line plant with one line devoted to body-on-frame pickups and SUVs with another line providing unit-body vehicles. Kia has ambitions to sell 800,000 units in total in the United States by 2010 – this plant is central to that objective.

The choice of westernmost Georgia as the site of the plant puts the Kia facility nearby the Hyundai Motor Company assembly plant in Montgomery, Alabama. In this way, Kia and Hyundai can share component suppliers when appropriate. Also, this is great news for Georgia. Georgia is about to lose two large UAW plants near Atlanta – the General Motors’ Doraville, Georgia Minivan plant and the Ford Taurus plant in Hapeville at the end of the runway at the Hartsfield-Jackson International Airport (ATL). While West Point will likely not draw many workers from the Atlanta area to man the Kia plant, Georgia gets 2,500 auto workers to add to its tax revenue base.

Toyota Takes Over Subaru Indiana Automotive Capacity: Ever since Isuzu bailed out of what was then called Subaru Isuzu of America, the SIA plant has been operating well below capacity. When Fuji Heavy Industries/Subaru found its long term relationship with General Motors acquired by Toyota Motor Company, the two companies began looking for ways to cooperate.

Toyota announced today that they would invest $230 million in adding 100,000 units of capacity for the Toyota Camry Premium Mid-Size Car to the SIA plant and increase employment by 1,000 workers. This move gives Toyota cheap capacity to add volume for the best selling passenger car in the United States. Already selling over 400,000 Camrys in the USA, this move gives Toyota the ability to boost Camry sales to over 500,000 units.
Fuji Heavy will continue to assembly Legacy, Legacy Outback and B9 Tribeca models at the SIA plant.

Asians Showing NO MERCY: Both of these moves are big deals. As General Motors and Ford close assembly plants to better match capacity with sales, the Asian manufacturers are becoming more aggressive. Clearly, the Asians are showing no mercy in the face of the domestic industry restructuring.

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