Hyundai to build $ 270 mln U.S. engine plant

SEOUL, March 13 (Reuters) Hyundai Motor Co., South Korea's top auto maker, said on Tuesday it plans to invest 0 million to build an engine plant at its U.S. car making unit in Alabama to serve growing demand in the world's No.1 auto market.

The engine plant, estimated to create about 520 jobs, will begin mass output from September 2008 and supply engines to the Alabama plant and a Georgia plant being built by its affiliate, Kia Motors Corp., Hyundai said in a statement.

The Alabama facility currently produces Hyundai's Sonata sedan and its Santa Fe sports utility vehicle.

Hyundai and Kia, which sell about three quarters of their cars abroad, are expanding overseas production to shield themselves from a strong won and frequent labour disputes.

Separately, Hyundai also said it would begin mass production of fuel-efficient environmentally friendly hybrid cars from 2009, with a production target of 300,000 in 2015.

Hyundai and Kia started test-producing the Accent and Pride sedans with hybrid technology in 2004 for South Korea's government.

U.S. sales of hybrid cars rose 28 percent in 2006 but growth in the segment, dominated by Toyota Motor Corp.'s Prius, is starting to slow, according to industrial data released last month.

Shares in Hyundai fell 0.29 percent to at 68,500 won as of 0509 GMT, compared to the wider market's 0.25 percent decline.

REUTERS KR KP1113