INDIA BUSINESS WORLD - May 2005
THE MONTH THAT WAS

HYUNDAI TO INVEST $700 M IN 3 YRS

Riding piggyback on the Santro's success, Hyundai Motors India has drawn up expansion plans that will pump up investments worth $700 million over the next three years and augment its Chennai plant capacity to four lakh units from the present 2.5 lakh units.

Hyundai Motors (India), which has set a target to cross the one million unit sales mark in the country by March next year, is also primed to launch an all-new Sonata in two-months time, which will match specifications of the improvised version being produced for US markets.

The new model, which looks like a cross between an Audi and a BMW, would be available in automatic and petrol versions and is fitted with an advanced fuel efficient Theta engine. It has also been decided not to touch pricing, letting it remain at Rs 16 lakh, even though several additions have been made including safety features which will be at par with European standards. The company has a target to sell 2,000 units annually of the new Sonata, which will be manufactured at the Chennai facility. The option of a replacement scheme to the 5,000 odd customers of the existing Sonata model is not being ruled out.

The focus though will be on its bestsellers Santro and the Accent, which has been Hyundai India's success story and responsible for working the numbers in India. "Achieving the one-million mark will be very critical for the company. We should achieve it in March 2006. Till now, the company has sold 8,50,000 cars in India in various segments,'' Mr BVR Subbu, president Hyundai Motors (India) told visiting journalists here.

The expansion blueprint will entail setting an additional plant with a 1,50,000 capacity, near its existing facility in Chennai. To fund the project totalling $700 million, the auto manufacturer intends to directly invest $550 million from its side and raise the remaining $150 million from its dealers.

The Korean auto giant, which has successfully employed a decentralisation strategy that virtually gives an autonomous character to units in different countries, also has plans to set up an R&D centre in India. "We have an overall feasibility report that is in the process of being prepared. The report will look at various options in India'' said Jae-Il Kim, senior vice-president (international business division) of Hyundai worldwide.