Y K.Koo M.D & CEO Hyundai Motors India Ltd. at the launch of Hyundai 'All New Elantra' in New Delhi Photo courtesy: Dalip Kumar
Hyundai Motors, the country's second largest car maker, said on Wednesday it would re-route export production to the Indian market and thereby reduce the need to commit heavy investment to a new plant.
The Korean brand has two factories near Chennai, with a combined capacity of 700,000 units a year. It is operating these at full capacity, shows the production data for July. Y K Koo, managing director, Hyundai Motor India, said: “We can manage production from the Chennai plant(s) for the next two to three years. We have a flexible production line, which caters to both domestic and export volumes.”
Both Maruti Suzuki and Hyundai, which together have 64 per cent of the domestic passenger vehicle market, are facing challenges in raising output, with their plants at full capacity.
In 2015-16, the Delhi-headquartered company saw domestic volumes of 484,324 units, a jump of 15 per cent from 2014-15, according to data from the Society of Indian Automobile Manufacturers. This was higher than the industry's growth of seven per cent.
However, export volumes in the year fell 15 per cent, as markets in West Asia and Africa came under pressure. Hyundai is the largest exporter of cars from India, with a share of 25 per cent in FY16.
"The Middle East and Africa markets are very, very slow. We reduced our export and (now) route volumes from these to the Indian market. That is the strategy. We have to maintain a minimum of 20 per cent export share,” added Koo.
Hyundai exported 25 per cent of its cars from India last year, down from 50 per cent some years earlier.
Its sister company, Kia Motors, is meanwhile finalising an Indian-entry plan, with the setting up of a unit. With the platforms of some shared by the two companies, experts believe Hyundai can tap Kia's capacity if demand for its cars surges.
Hyundai also said it aimed to become market leader in the domestic passenger vehicle segment, with at least two new products planned for launch every year.
Company officials, however, declined to provide a schedule for achieving that target. Maruti Suzuki is first, with 47 per cent of the market.