Hyundai Motor in India

The premium Compact Car “i20,” launched by Hyundai Motor Plant in India in 2008. It is not sold in the South Korean or North American markets.
The premium Compact Car “i20,” launched by Hyundai Motor Plant in India in 2008. It is not sold in the South Korean or North American markets.

 

Hyundai Motor Company, heavily affected by the strike, will build a sedan production facility in India. This may seem like the company is trying to expand the lineup in India, where it has the second highest market share, by adding compact sedans as the new strategic model. But it is likely that the company is also feeling the burdens of strong labor union issues. 

According to the Indian press on September 4, Hyundai will release a compact sedan, under 4m in total length, as early as the beginning of next year in India. Despite the fact that the Accent or i20 for European sales are already out, it seems like Hyundai is trying to expand the lineup and target the Indian market by developing and selling a new model.

The new compact sedan will be a good model for Indian consumers who feel that compact cars are not big enough, but mid-size sedans are overwhelming. This new model has the advantage of cheaper consumption taxes. The Indian government charges 12% consumption tax on cars less than 4m and 22% for cars over 4m.

A Hyundai associate said, “We are in the process of developing a compact sedan based on the i10, but no specific information may be disclosed at the moment.” Hyundai is also known to be reviewing to release the Genesis, a premium sedan, in India as well. No set dates have come out yet, but a small size sports utility vehicle (SUV) targeting the Indian market specifically is also under development. 

Hyundai’s foreign production rates have grown from 40% in 2008 to 56.8% last year, and all the way to 61% early this year. 

The labor union issues will encourage foreign production even more. Hyundai Motor Korea’s labor union has gone on strike and refused to work overtime or do extra work. This caused big problems in production, and the estimated amount of losses have come to over 2 trillion won (US$1.83 billion) so far this year. 

On the other hand, the Society of Indian Automotive Manufacturers (SIAM) expects the current Indian automobile market of 1.9 million vehicles to increase to an annual 9 million by 2020. Hyundai ranks 2nd place in the Indian market, following Maruti Suzuki in 1st, thanks to its increasing market share with the i10, i20, EON, Santro, and other compact cars.

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