Indian government urges Hyundai to set up its third plant

The Indian government has urged Hyundai Motor India, the country's second largest carmaker, to set up its third manufacturing plant in the country without hesitation as steps are being taken by the Centre to improve business environment and push manufacturing.

As per a PTI report, commerce and industry minister Nirmala Sitharaman said it is, however, up to the company to decide on the plant's location. She was speaking at a function on 'Korea India Industry and Infrastructure Forum', which was also attended by South Korean Minister for Trade, Industry & Energy (MOTIE) Joo Hyunghwan, who is in New Delhi for the review of India-Korea free trade agreement.

Ms Sitharaman added, "I do not think there are enough reasons for you (Hyundai) to think more about it. It's time that you set it up and this is a good time for Hyundai to announce this." She said the government is actively taking steps to improve the business environment in the country.

When queried for further information on the topic, Ms Sitharaman said, "The decision is apparently with the Hyundai leadership and I would only suggest that since they have two successful plants here, setting up of a third should not be an issue."
At present, Hyundai Motor India has two manufacturing plant at Sriperumbudur, near Chennai, in Tamil Nadu. The two plants together have a manufacturing capacity of 680,000 units per annum. For FY2014-15, the carmaker produced a total of 648,638 units, which means it saw 94.5 percent capacity utilisation.

Earlier this year, Hyundai Motor India’s MD and CEO, Y K Koo had said that the company is not looking to set up a new manufacturing plant at present as it has enough capacity for the next three years which could be stretched to 720,000 units.

In an interview to Autocar Professional in February 2016, Rakesh Srivastava, senior VP (Marketing & Sales), Hyundai Motor India, had said: “Last year we made 643,000 cars and have a capacity to produce make 720,000 units per annum. So 80,000 units is a big capacity that is still left to be utilised.  We have capacity for a couple of years. When the time comes and the market is growing, we will consider a new plant.”

Hyundai Motor India currently markets 10 models across segments – the Eon, i10, Grand i10, Elite i20, Active i20, Xcent, Verna, Creta, Elantra and Santa Fe – through 449 dealers and more than 1,150 service points across India.

The Indian operations play a key role in Hyundai Motor Corporation’s global export programme and it currently exports to around 92 countries across Africa, Middle East, Latin America, Australia and the Asia Pacific. In FY2015-16, it exported 162,221 units, down 15.17 percent year on year, but enough to retain the No.1 passenger vehicle exporter title.