Chennai: Hyundai Motor Co, South Korea’s top automaker, on Saturday opened its second plant in India to take on growing competition and cementing the country’s position as a global hub for small cars.
Hyundai, which along with affiliate Kia Motors, is the world’s sixth-largest automaker, is banking on new models such as the premium Genesis, and new factories in markets such as China and India to boost sales by 20% this year.
Hyundai is the second-biggest carmaker in India and the company said it is prepared to fight greater competition from an ultra-cheap car from No. 3 Tata Motors
“We are not looking to compete with the Nano in terms of price, but we are keeping our options open,” said Ashok Jha, president Hyundai Motor India referring to the Tata car priced at just over $2,500.
The proposed mini car would be a mass market model that meets all global standards, he said without elaborating.
The new factory in Sriperumbudur, near here, will double capacity to 600,000 units, second only to leader Maruti Suzuki India Ltd’s planned expansion to 1 million units by 2010/11.
The plant, which is adjacent to the existing plant, will largely be dedicated to making the new i10 for local and export markets, Chairman and Chief Executive Chung Mong-Koo said.
“Hyundai Motor India will play its role of a global manufacturing hub for all of Hyundai’s small car models.”
Hyundai has spent $1 billion on the new plant. An engine and transmission plant, with a capacity of 300,000 units, will be operational later this year, Jha said.
Hyundai last week beat market expectations by more than doubling its quarterly operating profit, and predicted higher 2008 margins.
It is aiming for a 6.5% operating profit this year and a 20% rise in vehicle sales to 3.11 million units.
It will count on new models such as the Genesis premium sedan and cost-saving efforts, while a weaker won will help score price competitiveness against Japanese firms battling a stronger yen.
But high prices of oil and raw materials and a potential slowdown in the global economy are concerns.
There are also worries about its growth in the US and China, the world’s two biggest auto markets, which have been hit respectively by a weak economy and tough competition.
Hyundai sold 244,148 vehicles in January, 25% more than a year ago, helped by the revamped Sonata sedan. It sold 192,230 vehicles overseas, an increase of 28%.
In India, leader Maruti Suzuki is ramping up and Tata Motors will roll out later this year the Nano, which could steal share from the popular Hyundai Santro hatchback.
Renault and Nissan Motor are studying the feasibility of a $3,000 car with motorbike maker Bajaj Auto, while others including Toyota Motor and Volkswagen have also expressed interest in a cheap car.
Annual passenger vehicle sales in India are estimated to nearly double to 2 million units by 2010 on rising incomes and new launches. Hyundai is aiming for a quarter of the market in 2008, up from just over 20% now.
Hyundai sold 327,160 vehicles in India in 2007, up 9% from the previous year. Sales of models such as the Santro and Getz hatchbacks rose 8% in the domestic market, while exports climbed 12%.
Hyundai said it aims to make 530,000 vehicles in 2008. It is expanding its local dealer network to 300 from 230, and will export to 90 markets, up from 73, from the port city of Chennai.
Hyundai is also talking to Indian firms for a possible venture for commercial vehicles.