Hindustan Motors is in talks with sports utility vehicle makers across Europe and other markets to utilise the surplus capacity of its Chennai car plant.

The Chennai car plant, which is being demerged by the C.K. Birla company as a standalone subsidiary, is hopeful of roping in a couple of international SUV brands looking at outsourcing some of their manufacturing to India in the next few months.

Last month, the board of Hindustan Motors had decided to demerge the Chennai facility, which is now in the process of charting its own business plans. The 24,000 unit a year plant currently produces the Pajero sport and Outlander vehicles from the stable of its partner Mitsubishi, while importing and marketing a third brand, Montero, in India.

"We have lot of surplus capacity, which we want to let out for contract manufacturing. We hope to finalise a contract deal in the next few months. There will be no investment from our part," P. Vijayan, COO of HML’s Chennai car plant, told Business Line on the sidelines of the launch of its dealership here today.

After starting to make the Pajero brand at the plant since September last year, it has sold about 2,500 units. The SUV market at this price point segment is estimated at about 30,000 units annually, currently dominated by the Toyota Fortuner.

"We are targeting 5,000 units of Pajero for next fiscal, as we intend to scale up gradually," he said.

The company also plans to launch a couple of variants of Pajero in the next few months, which would have some value-additions.

It also plans to increase localisation of the manufacture of the brand from the current level of about 20 per cent to 50-60 per cent in the next three years.

amitmitra@thehindu.co.in

(This article was published on February 21, 2013)
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