India: Hyundai to raise capacity to ensure 22% market share

NEW DELHI: South Korean car maker, Hyundai, plans to tweak its existing Indian operations to expand the manufacturing capacity as it aims to take its share to 22% of the total cars sold in the domestic market.

Hyundai’s total capacity will go up to 6.7 lakh cars in next two years with minor investment at its twin plants in Chennai from the current 5.9 lakh units per year.

The company that is setting up its third plant in China has not firmed up a similar plan for India where it has been facing a prolonged labour unrest that is yet to be settled.

Speaking to ET, HW Park, CEO & MD, Hyundai Motor India said the company still has enough capacity to meet the market demand.

“Right now the domestic demand is very high and we can supply more because we are following a portfolio. So we export less and sell more in the domestic market,” he said. He said, “Hyundai is not considering a new plant because there’s no production constraint right now.”

Mr Park also said that for now Hyundai is not linking investment decisions to its labour problems: “We decided not to link labour relations to investment and we are trying not to relate the two now. We feel the labour problem is not serious and we can resolve it with support from the Tamil Nadu government. If it gets serious in the future...we’ll see.”

We have agreed to a review meeting, which is still going on and we have to see the result, Mr Park said. As for China, the third plant there is exclusively for domestic demand, but in India the volumes are currently split with 58% capacity targeting domestic sales and 42% exports, he said.

Hyundai said depending on the domestic demand it can divert 80% production capacity to meet domestic demand. The company had sold 2.8 lakh cars in the last fiscal and had 20% share in the domestic market. Its sales jumped 21% to 1.4 lakh cars in the first five months of the fiscal.