McAllen not in talks with Hyundai

McALLEN - McAllen City Manager Mike Perez says city officials are not in talks with Hyundai Motor Co., but he wouldn't confirm which automaker is considering building a plant here.

"I can't say anything except it's not Hyundai," Perez said Sunday.

After McAllen Mayor Richard Cortez announced last week the city was in negotiations with an automaker, there was speculation the Korean automaker had renewed its interest in the Rio Grande Valley. Kia Motors Corp., a subsidiary of Hyundai, had considered locating a plant in McAllen in 2006.

Cortez offered few details about the negotiations at last week's press conference, only saying McAllen was in competition with another location in another state.

Perez's word on Sunday that it is not Hyundai shortened the list and fueled further speculation.

Tom Libby, a senior automotive analyst at J.D. Power & Associates in Detroit, cited two possible contenders Monday - European automakers Volkswagen AG, the parent company of Audi, and Fiat SpA, which owns Alfa Romeo and Maserati.

The weakening U.S. dollar, which makes it more expensive for foreign automakers to export cars to the United States, has prompted both companies to consider building assembly plants in North America.

"Those are the only ones I know of," Libby said. "They're being hurt tremendously by the weak dollar. (Volkswagen) is competing with many brands that make their vehicles in the U.S."

Volkswagen CEO Martin Winterkorn recently said they would make an announcement on a U.S. plant by July and had narrowed possible sites to locations in Alabama, Tennessee and Michigan, Reuters news service reported.

"It probably means it's about 90 percent certain. It's not concrete," said Haig Stoddard, an automotive analyst with economic forecasting company Global Insight about Volkswagen's interest in locating in those three states.

"If someone in Texas could offer them a really good deal they might go ahead and do it," Stoddard said.

Volkswagen Group spokeswoman Jill Bratina declined to specifically address the company's plans.

"We're looking at local production (in the United States). We're not prepared to comment on any specifics," she said.

Earlier this year, Fiat announced it was looking for a site in the United States to build Alfa Romeo cars, according to automotive trade publication Auto Week. The brand of sport cars was pulled from the U.S. market in the mid-1990s, but Fiat has said they will reintroduce Alfa Romeos in this country by late 2009.

Fiat's press office in Italy did not return a phone call for comment.

Whichever automaker McAllen officials are in negotiations with, corporate executives are extremely careful about keeping the locations they're scouting quiet to keep their competitive advantage, Libby said.

"They're very close to the vest until they announce," he said.