SEOUL/SAO PAULO ― Hyundai Motor will be expanding production capacity at its Sao Paulo plant from this year, largely buoyed by the soaring demand for its Brazil-only compact, the HB20.

According to company officials on Monday, the Korean carmaker has recently decided to build some 5,000 more cars at the plant per year, increasing its annual output to 185,000 vehicles from this year.

With the planned production expansion, the carmaker hopes to meet the growing demand for its hot-selling flex-fuel hatch HB20, the first model developed exclusively for the Latin American market. 

“Hyundai is considered a premium brand here. Customers see the HB20 exceeding their expectations about quality,” said Eugenio Cesare, executive director of production at Hyundai Motor Brazil.

Hyundai started operating the $700 million factory, located in Piracicaba, Sao Paulo, in September 2012, with an aim to grab more market share in Brazil, the last “BRIC” nation for the Korean carmaker to deepen its presence.

Following the adoption of the two-shift system just one month after launching operation, the plant implemented the three-shift system in September last year, hiring 700 more people. Currently, 2,700 people are working at the facility.

“It’s really unique for the Brazilian history,” said Mauricio Jordao, communications manager of the Brazilian unit. “Most of the plants here start slowly then increase capacity. But the whole process was really fast for us.”

Currently, the plant is rolling out the hatch and sedan versions of the HB20 and a sport utility vehicle, the HB20X. The carmaker is also considering building a new compact crossover in the near future.

In a sign that Hyundai’s efforts are paying off, its market share has also surged over the past few years.

Before the launch of the HB20, Hyundai was the ninth-largest carmaker in the Brazilian market, which was dominated by Volkswagen, General Motors, Fiat and Ford. But last year, the company jumped to become the No. 5 player in the market.

In the first four months this year, the HB20 was one of the top-selling models in the highly competitive compact segment with 43,800 unit sales, after the Volkswagen Golf, Fiat Uno and Palio.

Hyundai Motor Group, which owns the Hyundai and Kia brands, is expected to continue attempting to strengthen its foothold in the emerging Latin American market.

Adding to Hyundai’s production expansion in Brazil, its affiliate Kia Motors also recently announced its plan to build a new plant in Mexico.

The new plant, capable of producing 300,000 vehicles per year, will be built in the city of Monterrey, some 200 kilometers from Texas. The carmaker plans to start construction in early July for completion by 2016.

By Lee Ji-yoon and Elaine Ramirez
(jylee@heraldcorp.com) (elaine@heraldcorp.com)