Hyundai Motor, South Korea's biggest automaker, said Tuesday it would invest $270m to build a second engine plant at its US production facility in Alabama, as the company seeks to strengthen its position in the world’s top auto market.

The move fits in with plans by Hyundai and affiliate Kia Motors to double their market share in the US to 8.6 per cent by 2010. They are targetting combined sales of 1.65m vehicles in the US in 2010.

The new engine plant in Montgomery, Alabama, will produce 2.4-litre 4-cylinder Theta engines for Hyundai’s assembly plant in the same town and a new plant being built by Kia in Westpoint, Georgia. Construction of the new plant will start immediately and mass production will begin in September 2008.

Hyundai opened a $1.1bn auto plant in Montgomery in 2005 to produce Sonata sedans and Santa Fe sports utility vehicles. Kia began construction of the Georgia plant in October last year.

The South Korean carmakers have been gradually increasing the portion of overseas production to minimise the negative impact of currency fluctuations and labour disputes. Hyundai and Kia plan to more than double their overseas production capacity to 2.93m units by 2010 from 1.43m this year.

Hyundai also aims to almost double its market share in western Europe to 4 per cent by selling 500,000 vehicles a year by 2011 as construction of its Czech plant is set to completed by the end of 2008. The company expects the planned introduction of the i30 mid-sized sedans to drive European sales this year.

Hyundai’s overseas projects including construction of the Czech plant hit a snag last year when Chung Mong-koo, the group’s chairman, was charged with embezzlement of company funds and breach of trust. He was sentenced to three years in prison for the charges earlier this year.

Expanding overseas production facilities has become more important for Hyundai in recent years as its profitability deteriorates due to the local currency’s sharp appreciation against the dollar and the chronic labour problems at home. Net profits at Hyundai and Kia dropped 35 per cent and 94 per cent respectively last year.

Exports account for more than half of Hyundai’s sales. The world’s sixth-largest carmaker has a 2.8 per cent share of the US market and Kia has a 1.8 per cent US market share.

Meanwhile, Hyundai is planning to increase production of more fuel-efficient hybrid cars, aiming to make 300,000 gasoline-electric or diesel-electric powered vehicles by 2015.