State In Top Five in Auto Manufacturing

Alabama's annual auto production is expected to near 900,000 in the next few years, a mark that could push it into the top three auto-making states in the country.

Currently No. 5, the state's auto industry will get a capacity boost with planned expansions at the plants operated here by Mercedes-Benz and Honda, as the automakers aim to keep pace with projected sales and make room for new additions on their assembly lines.

And Hyundai, while it hasn't announced an expansion, already has surpassed the capacity at its Montgomery factory this year, and growing demand for its vehicles should help that trend continue.

It's a notable turnaround from just two years ago, when Alabama's auto production bottomed out at just under 468,000 in the midst of the global industry downturn.

"It's significant to be No. 5 in the country, but you could potentially be looking at the position of No. 3 or No. 4 in the U.S. in automotive production, which is phenomenal given that it's happened in the last 15 years," said Steve Sewell, executive vice president of the Economic Development Partnership of Alabama and a board member for the Alabama Automotive Manufacturers Association.

In 1997, Mercedes built its first M-Class SUV in Tuscaloosa County, kicking off the state's auto industry. Annual output rose steadily every year after that, until peaking at 739,019 vehicles in 2007.

Last year, the industry began to rebound, as the factories ramped up production on assembly lines that had been slowed during the slump.

Alabama's 2010 auto output reached nearly 698,000, finishing behind Michigan, with 1.6 million; Ohio, 1.1 million; Indiana, 890,000; and Kentucky, 739,000, according to numbers from the Automotive News Data Center.

Hyundai alone produced more than 317,000 vehicles through November, already topping its announced annual capacity of 300,000 vehicles.

Demand is high for its Alabama-made Sonata sedan and Elantra compact, both fuel-efficient, economical models that have been a hit with cost-conscious buyers.

Meanwhile, demand also is rising for the luxury SUVs built by Mercedes-Benz in Alabama.

The automaker has made a series of recent announcements about additional investment and new model launches for the Vance plant, including a capacity expansion as the C-Class sedan and an unnamed fifth model join the current lineup by 2015.

Meanwhile, Honda has struggled with production issues this year, following two natural disasters -- the earthquake and tsunami in Japan and flooding in Thailand -- that damaged supplier operations and caused a parts shortage.

As a result, the company's Lincoln plant, along with other facilities in North America, were forced to scale back production.

But officials call the slowdowns temporary setbacks that aren't affecting Honda's plans. Last month, the automaker said it would raise annual capacity at the Alabama plant to 340,000, up from 300,000.