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Our Bureau

Chennai, Dec 10 South Korea’s biggest automaker Hyundai Motor Company announced today that it is suspending its plans to sell buses in India.

According to agency reports quoting Hyundai Motor Company’s spokesman in Seoul, the decision was primarily due to a slowdown of India’s economy.

The plan to expand into India’s bus market is being put on hold due to the recent economic crisis.

However, the company has not given details on when it may move forward.

Hyundai Motor Company signed a technical agreement with the London-headquartered Caparo group to manufacture the buses in India. Caparo will set up the plant in south India to produce the buses.

Speaking to Business Line, Caparo India’s CEO, Mr Uttam Bose, said, “The Chairman of Caparo and I met with the top officials of Hyundai Motor in Seoul in November and arrived at a clear cut understanding. The project is put on hold temporarily due to economic slowdown.”

Mr Bose was hopeful that the project would be revived after two or three quarters. Since the commercial vehicle industry is sensitive to cost of finance, it has witnessed a sharp drop in sales. The recent measures of the RBI and Government are expected to bring down the cost of finance and cost of vehicles. The situation would improve within a year’s time.

The assembling unit would be a Caparo venture and promoted through an independent company, which was to invest a few hundred crores of rupees to set up a facility in South India.

The proposed facility will have annual capacity of 1,500 luxury buses.

To begin with, it would be an assembly unit of CKD (completely knocked down) parts imported from South Korea, catering to domestic as well as export markets. However, no significant progress has been made so far.

The commercial vehicles segment began witnessing a drop in sales since the beginning of the third quarter.

For the last two months sales dropped by 60 per cent forcing vehicle manufacturers to cut back production.

The passenger bus segment witnessed a 32 per cent drop in November 2008 compared to a year ago .

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