Hyundai Adding Capacity to Build on Success in India
The automaker says it has reached the limits of its 680,000-unit capacity. Gujarat tops the list of potential sites for its next plant.
MUMBAI – Hyundai India is emerging as a global manufacturing base for small cars and utility vehicles.
“With the strong performance of the Grand i10, Elite i20 and Creta in the last few months, Hyundai’s 2015 local sales of cars and SUVs have increased by 15.7% to an all-time record of 476,000, giving us a peak market share of 17.2%,” notes Vice President Rakesh Srivastava.
Hyundai is one of India’s biggest vehicle exporters, having shipped an estimated 450,000 units to 85 countries in its latest fiscal year.
“As Hyundai has fully utilized its total capacity of 680,000 (vehicles), fresh investments are planned urgently to increase capacity,” Srivastava says.
The automaker has invested Rs200 billion ($3.1 billion) in its two manufacturing plants in Chennai and Rs98 billion ($1.5 billion) in its suppliers’ facilities.
Hyundai offers 10 light vehicles across various segments. The list includes the Eon small car, the i10 range of three compact cars, two i20 models, the Xcent compact sedan, large Verna (Elantra) sedan and Creta and Santa Fe CUVs.
The decision to invest Rs45 billion ($700 million) in a third production facility signals “India is the future market for our brand,” Managing Director and CEO B.S. Seo says. “We will create fresh capacity for 1 million vehicles in two stages.”
The automaker is looking at sites in Rajasthan and Andhra Pradesh states, but Gujarat tops the list because it is emerging as an automotive center and offers accessibility to shipping ports.
Plans are to launch two to three new models every year until 2020.
To support its growth and expansion plans, Hyundai continues to increase its number of dealers (435) and service points (1,100).
A Rs4 billion-Rs6 billion ($60 million-$90 million) investment in new factory automation has enabled Hyundai to further limit costs, as well as maintain quality. No workers have lost their jobs as a result of the introduction of the manufacturing technology.
But more important to its success has been the elevation of Hyundai’s brand image. Its hot-selling Creta compact CUV has been a marketplace hit.
“The reason for Hyundai’s success is that it tries to understand the consumer mind and tries to meet their preferences in design, comforts and performance,” Srivastava says.
After nearly 20 years in India, Hyundai has sold more than 4 million vehicles locally and exported another 2.5 million.
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