Financial Daily from THE HINDU group of publications
Thursday, Jun 27, 2002
Hyundai expanding capacity -- Chennai plant to be export hub for small cars
Mr J.I. Kim, Managing Director, Hyundai Motor India Ltd (right), and Mr B.V.R. Subbu, President, at the roll-out of the 300,000th car at the company's plant at Irungattukottai, near Chennai, on Wednesday.
CHENNAI, June 26
HYUNDAI Motor India Ltd has set in motion a programme to increase its capacity to 1,50,000 units a year, in the first phase, from the present 1,20,000 and also announced its intention to make its plant here the global export hub for small cars. The company has also delayed the launch of its sports utility vehicle, the Terracan, which was to be imported as a completely-built-unit and launched in June-July this year.
Addressing a press conference on Wednesday at the company's plant at Irungattukottai, near here, on the occasion of the rollout of the 3,00,000th car, Hyundai Motor India's Managing Director, Mr J.I. Kim, said the expansion programme included expanding the assembly line, engine shop and paint shop at an additional investment of $ 60 million. The enhanced capacity would enable Hyundai to roll out new models later this year.
Mr B.V.R. Subbu, President, said that the company would be spending almost $ 200-250 million up to 2005 in rationalising the assembly line and expanding capacity ultimately to 2,00,000 units. Rationalising the assembly line would help the company produce newer models and variants on the same line. The capital expenditure depended on how the market developed.
The 3,00,000th car - a Prime Beige coloured Accent Tornado - rolled out just 10 days short of a year since the roll out of the 2,00,000th car, which was also an Accent, and in 45 months since commercial production commenced in September 1998.
Mr Kim said the company had sold over 2,47,000 Santros, over 45,000 Accents and over 2,500 Sonatas and would shortly achieve the three-lakh mark in sales. The company ended last financial year with a turnover of Rs 3,403 crore and a profit growth in line with the top line growth. Mr Subbu said part of the expansion programme would be capitalised this year and a majority of the expenditure in capacity expansion (to increase the capacity to 150,000 units) would take place during January-September 2003.
Hyundai Motor India, he said, planned to come out with a five-door Accent, an automatic transmission version of the Santro and a common rail direct injection diesel engine on the Accent, all by September-October 2002.
Apart from these, the company had obtained FIPB approval for CBU imports from the parent company's stable of cars and utility vehicles. By 2005, Hyundai Motor India would become the global source for the Santro range of small cars, including the new generation cars that were slated for launch in mid- to end-2004.
Asked about the launch of the Terracan, which the company originally planned to introduce by June-July, Mr Subbu said studies were still going on as customer preference had shown the need for a vehicle with high specifications - high horse power and high performance.
There was an interest in the automatic transmission Santro mainly in the Mumbai, Bangalore and Delhi markets, with the preference slightly less in Chennai and Pune.
On the automobile market in the country, Mr Subbu said "we believe the A segment (made up of the Maruti 800) will disintegrate". The size of this segment, he said, had shrunk from about 2,70,000 to 1,80,000 and was expected to come down further to about 1,00,000 this year. Therefore, he said, the growth would be tremendous in the B segment (comprising cars like the Santro, Zen, Wagon R, Alto, Indica and the Palio) and substantial in the C segment (models like the Accent and the Ikon). The overall market was expected to grow by about two per cent this year, with different segments witnessing different growth rates.
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