No new plant in India till 2020: Hyundai

S Ronendra Singh Chennai | Updated on July 27, 2018 Published on July 27, 2018

Hyundai Motor India’s plant at Sriperumbudur near Chennai has adopted smart manufacturing practices to become future-ready, meeting safety and emission norms

Hyundai Motor India Ltd (HMIL), the country’s second largest passenger car manufacturer and an export leader since inception, does not plan to set up a new plant in India, at least till 2020.

Its two plants in Chennai are utilising 97 per cent of the capacities right now at 7.13 lakh units per annum that will go up to their optimum level of 7.5 lakh units by next year. This capacity is sufficient to cater to the domestic market, said HMIL.

“We have started exporting completely knocked down (CKD) units to Asian markets like Vietnam,” YK Koo, HMIL’s MD and CEO, told reporters on the sidelines of an event here. Against the current 10,000 units it plans to export 20,000 units from September to other petrol (car) driven markets and 50,000 units by next year. “So we will have space for 50,000 units for domestic production,” he added.

Asian markets increasingly prefer CKDs to CBUs (completely built units), he observed. “Therefore, more CKDs means more space for production for the domestic market,” he said. “Right now we are thinking of only 7.5 lakh units per year till 2020. Beyond 2020, when the market grows, we may have to rethink.”

Once a runaway leader in exporting cars from India, HMIL is now reluctant to expand its capacity or set up a new plant.

Arch rivals like Maruti Suzuki, meanwhile, are working hard to capture the top spot in exports, too. In FY18, Ford India saw a 14 per cent jump in exports to 1,81,148 units. HMIL’s exports, on the other hand, dropped 8 per cent to 1,53,942 units.

Hyundai’s exports have declined over the past decade as it has faced capacity constraints at its twin factories in Chennai and has dithered over setting up a third factory.

During its peak in FY19, it had exported more than 2.50 lakh units from here. But it later shifted the production of some of its models like Elite i20 for the European markets to other global factories. For 2018, the company is targeting exports of 1.5 lakh units.

When asked about volumes, Koo said: “We are not looking at volumes but brand value for our customers...brand power, performance cars and repurchase by our customers. We like to have emotional bonding with them. That is why our new advertising campaigns — Brilliant Moments (one with Accent and another with Santro) have seen record views of 100 million in just 10-11 days. We want to create such memories with our customers.”

Asked if frequent policy changes by the Indian government are among the reasons why Hyundai is not keen on a new facility, he said yes.

“As a manufacturer, we plan way ahead. For instance, we are investing more than $100 million to develop the AH2 (code name for the new upcoming family car/comeback of Santro), so we need to know what lies ahead in terms of policies,” he said.

The writer is in Chennai at the invitation of Hyundai Motor India.

Published on July 27, 2018
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