Indian Auto Market
Hyundai and Kia are enjoying strong sales growth in India, which has emerged as the world's third-largest auto market. Kia, in particular, saw its sales increase by more than 20 percent year on year from January through April 2023.
Hyundai’s and Kia's combined sales stood at nearly 300,000 units at 295,359 units in the Indian market in the first four months of this year, according to the Society of Indian Automobile Manufacturers (SIAM) on May 15. This represented a 15.5 percent increase from the same period of last year. Specifically, Hyundai sold 197,408 units in the first four months of the year, up 11.7 percent from last year, while Kia 97,851 units, up 23.9 percent.
Last year, Hyundai and Kia sold 807,067 vehicles in India, the largest number ever, and expectations are high that they will set a new record this year. Hyundai has set a sales target of 595,000 units in India this year, up 7 percent year on year. This is slightly higher than Hyundai's European sales target (593,000 units). Kia is also targeting the sale of 283,000 units in India this year, up 11 percent from last year.
Their proportion of highly lucrative sports utility vehicle (SUV) models has been on a gradual rise. Hyundai's local strategic model, the Creta, was successful in that it ranked first in the Indian SUV market in 2020 and second in 2021.
The Indian automobile market continues to grow rapidly with domestic sales of 4.75 million units last year, ranking third in the world after China and the United States. In particular, the Indian government is actively promoting the growth of the electric vehicle market in India. In response, Hyundai has been expanding its local investments.
On May 11, Hyundai signed a memorandum of understanding (MOU) with the Tamil Nadu government of India to invest 200 billion rupees (about 3.24 trillion won or US$2.4 billion) over ten years beginning from this year. Chennai in Tamil Nadu is home to Hyundai's first and second Indian plants. Currently, the two plants’ combined annual production capacity is about 760,000 units, of which about 150,000 are exported. Under the agreement, Hyundai will use the investment funds in building not only an ecosystem for electric vehicles but a battery pack assembly plant with advanced facilities.
In addition, Hyundai is also pursuing the acquisition of a foreign automobile plant in India for the first time since entering the market in 1996. In March, Hyundai Motor India signed a legally binding term sheet for the acquisition of General Motors’ Talegaon plant. The acquisition of the GM plant and the investment in the Chennai plant is expected to elevate Hyundai's local production capacity in India to around one million units.