Hyundai Motor America plans to spend $150 million building a new North American headquarters on the site of its current offices — a refurbished factory — in Fountain Valley.
The project would take at least a year to build and would generate about 1,500 construction jobs. It would also double the space of the current headquarters and provide room to double the fast-growing auto company's corporate staff to about 1,400 employees, said John Krafcik, chief executive of Hyundai Motor America, the U.S. division of the South Korean automaker.
"This really cements our relationship with Southern California," Krafcik said. "We think this is the best place to plan and design our vehicles. It is still a center of innovation for North America."
Construction on the new sales and marketing headquarters will start next year and is expected to be completed by the end of 2012. But first Hyundai has to move about 700 employees out of the 18-acre campus to a temporary headquarters. The automaker is looking at three nearby sites and will make the move early next year.
"The general sense is that this is in some sense lucky ground for Hyundai," he said. "We have come through some ups and downs, and it makes sense to reinvest in the land."
The automaker also has a factory in Montgomery, Ala., where it makes the Sonata sedan and Santa Fe SUV. Elsewhere in Southern California, Hyundai operates a design studio and finance unit in Irvine, an advertising office in Huntington Beach and a parts distribution center in Ontario.
Hyundai opened its first U.S. auto sales office in 1985 and starting selling vehicles here in 1986. At first its small cars sold well because they were inexpensive, but the brand was plagued by reliability problems and annual sales dwindled to just 90,000 by 1998. Hyundai considered abandoning the market.
Instead, it created a new warranty program that guaranteed the vehicles bumper to bumper for up to 60,000 miles and the powertrains for up to 100,000 miles and went to work reengineering its cars.
These moves have paid off. Hyundai recently climbed into Kelley Blue Book's top five most-considered auto brands among new-car shoppers, pushing Nissan Motor Co. into sixth place. After scoring among the worst manufacturers for both initial quality and long-term dependability for years, Hyundai now consistently beats the industry averages, according to J.D. Power & Associates.
Through the first eight months of this year, Hyundai sales rose 17% to 363,491 vehicles. Its market share in August was 5.4%, making it the sixth-largest auto seller in the U.S. It will probably top 500,000 in annual vehicle sales for the first time in its 24 years in the U.S. market.
In November, Hyundai will launch its line of Equus vehicles — sedans that will sell for about $60,000 and are intended to compete with the top luxury models from BMW, Lexus and Mercedes-Benz.
Krafcik said the new headquarters would have more than 400,000 square feet of office and garage space and be among the most energy-efficient buildings in the state. Hyundai has yet to select an architect but intends to use a design that allows for more social interaction among workers.
"We have really been in a make-do situation here for years, using a refurbished factory for office space," he said. The company purchased the facility in 1989.