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Hyundai To Temporarily Close Alabama Plant

Analysts say sluggish demand for new cars in the U.S. following the subprime mortgage crisis has led carmakers to curtail production.

SEOUL, South Korea (AP) — South Korea's Hyundai Motor Co. said Wednesday it will shut its auto plant in Alabama for 10 days during the fourth quarter amid sluggish demand.
''We have decided to halt the U.S. plant for three days in October and a combined seven days in November and December due to a slowdown in sales,'' said Ki Jin-ho, a Hyundai Motor spokesman.
Hyundai's Montgomery, Ala., plant manufactures the mid-size Sonata sedan and the Santa Fe sport utility vehicle. It was closed on Oct. 5 and will be closed this Friday and Oct. 19, with the remaining seven days yet to be scheduled, Ki said.
Ki didn't say how much the 10-day shutdown will cost the world's sixth-largest carmaker by sales.
''We are taking a temporary measure to suit the U.S. market conditions, like other carmakers which are also cutting down production,'' he said.
Hyundai began producing vehicles at the factory in 2005.
John Kalson, vice president of Hyundai Motor Manufacturing Alabama LLC, said that Hyundai is encouraged by strong sales of the Santa Fe, but said Sonata sales have fallen slightly.
''This adjustment in our production rate is temporary in nature, although we remain subject to market forces and customer demand for our products,'' Kalson said in a statement.
Analysts said sluggish demand for new cars in the U.S. following the subprime mortgage crisis has led carmakers to curtail production in the world's largest automobile market.
Hyundai, which is likely to introduce a new version of its Sonata sedan in the U.S. early next year, needs to minimize its inventory of current Sonata models this quarter, analysts said.
Jeff Lee at Hana Daetoo Securities in Seoul said he's optimistic Hyundai's U.S. sales will improve next year as the company is focusing on marketing to boost sales and plans to launch its new Sonata in the first quarter of 2008.
If Hyundai sells 470,000 vehicles in the U.S. this year it will be successful amid a slowdown in the world's economic powerhouse, said Stephen Ahn, an analyst at Woori Investment & Securities Co.
Hyundai sold a total 455,520 vehicles in the U.S. last year, accounting for 2.8 percent of the market. In August, Hyundai revised down its 2007 U.S. sales target to 510,000 vehicles from 555,000.
In the January-September period, the carmaker sold 358,407 vehicles, compared with 359,259 sold in the same period a year earlier.
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