Hyundai to invest Rs 800 cr on small car for India

South Korean car-maker Hyundai will invest around Rs 800 crore (Rs 8 billion) to develop a small car for the Indian market that is likely to be launched in the next two years.

The firm, which has operations in India through a wholly -owned subsidiary, Hyundai Motor India Ltd, will manufacture the car, which will be smaller than the Santro, at its plant in Chennai.

"We are developing a small car and approximately Rs 800 crore will be invested at the Korean plant for development," newly appointed managing director and CEO of Hyundai Motor India Ltd Han-Woo Park told reporters.

He declined to give any details, but said: "It will be smaller than the Santro and the price will also be lesser. It will take at least 24 months from now to launch the car in India. Right now, it is in the design stage.

"Initially it will be targetted at India but gradually it will also be exported," Han-Woo added.

"It will be manufactured at the Chennai plant once the design gets completed," he said. HMIL, which sells popular compact cars like Santro, i10, i20, has made India a small car hub for the Korean firm and has been exporting the cars to overseas markets.

In October, the company sold a total of 51,736 units, an 11 per cent growth compared with same month last year. Its exports, however, dipped by 11.9 per cent to 23,435 units during the month.

On Auto Expo 2010 in Delhi, Park said there would not be any new model from HMIL, but it would showcase a 'concept' car from Korea and also premium sports car 'Genesis', manufactured at the company's North America plant.

Company officials later clarified that any model upto the premium hatchback Hyundai i20 would be manufactured at their Sriperumbudur facility near Chennai.

"India is small car hub for us and it will be an attractive model for India customers", HMIL vice-president sales and marketing Arvind Saxena later said.

He said the proposed small car would be mainly targeted at the domestic market but would also be exported.

The company was utilising 90 per cent of the plant at Sriperumbudur and once the small car was launched it would reach the full capacity of the plant.

"The total plant capacity is 6,30,000 units per annum. This year, we are manufacturing 5.75 lakh units," he said, adding last year around 5,45,000 units.

When suggested that the company was focusing more on the small car than premium Sedan, Saxena said India was a different market when compared to other markets. "Seventyfive per cent of automobile market in India is in small car and our presence will continue to remain (in this segment)," he said.

To a question, he said HMIL was hoping to achieve 14-15 per cent growth, the same as that of the industry.

"As per calender year (January-December) (auto) industry should grow by almost 14-15 per cent. We should also be able to maintain similar amount of growth," Saxena said.

On the launch of Sports Utility Vehicle "Santa Fe", Saxena said said it was 'not yet finalised'.

The company had earlier announced it would launch the SUV in the country by 2010. The vehicle would be equipped with a new 2.4 litre four-cylinder petrol engine and would compete with Honda CR-V and the Maruti Suzuki Grand Vitara.

On the Sonata-Embera, Saxena said the company was expecting to sell 70-80 units per month in the country but could sell only 60-70 units.

He said the government's stimulus package for reviving the auto-industry had helped in triggering 'fundamental demand' in the market.

"Over the last ten months there has been a fundamental demand and it is getting stronger," he said.

To another question, he said the company was still in the process of recruiting NRIs and expatriates.

Hyundai Motor India earlier this month had said it would hire NRI's and expatriates in executive positions as part of a new recruitment policy aimed at taping global talent.

HMIL currently has around 1,650 regular employees at its plant in Sriperumbudur. It has 2,500 contract employees and 2,000 trainees, he added.