Company Watch - Hyundai Motor India Limited (HMIL)

The Hyundai Motor India -

Hyundai's 6th manufacturing unit outside the parent country, is also the group's largest overseas production base. Even as the project was being conceptualized, Hyundai Motors India Ltd.(HMIL) was always going to play an important role in Hyundai Motors Company's international operations.

That the company is fully owned by the parent group and the integrated unit at Sriperambudur can today roll out cars with almost 85% localized content, bears testimony that the Indian operations have been put down to play an important role in Hyundai's goal for the 21st century - to be joint the ranks of the GT-10 (Group 10) Companies.

The Infrastructure

The Hyundai India plant located in Irungattukottai, 30 kilometers from Chennai was built in record time. The plant is first self-sufficient manufacturing unit in India to be independently invested by an overseas automobile company. Incorporated in May 1996, the groundbreaking ceremony for the Chennai plant was held in December in the same year, and the first pilot Santro was ready in a record-breaking 17 months.

The plant which stands on a 500+acre plot has been built with an initial investment of more than Rs. 2500 crores. It has a capacity to make 120,000 cars and 130,000 engine transmission units per annum and is the largest overseas investment made by the Korean Company.

HMIL commenced operations with 70%-localized content, which is one of the highest amongst all car manufacturers. The entire powertrain and the body panels are made in-house and the integrated manufacturing setup at the Hyundai Motors Chennai plants consists of:

Hitachi Zosen 2500 ton presses for the body panels
State-of-the-art Paint shop
Final assembly line
Engine and transmission lines
Aluminium foundry Plastic extrusion unit
In-house R&D Centre

Hyundai has brought in 14 Korean companies and helped them setup base in India for sourcing components. The total vendor base consists of 60 companies located at the plant site itself. HMIL aims to increase localized content to over 90% in the millennium.

The Present

Although the HMIL is said to have initially planned to launch their Indian operation with a car for the mid-sized segment, the company changed policies and introduced the Santro for the small car market. A decision which in hindsight, seems to have paid handsome dividends.

A formal study was commissioned by Hyundai prior to the launch of the Santro, to gauge the - as Mr. BVR Subbu, Director Marketing & Sales says - "stated and not-so-stated" needs of the Indian small car buyer. Several factors right from the design of the car, the cooling of the AC, and the dealer network have been on the basis of the study so as to present to the people the kind of car that they want and need. The Santro has been designed by in-house Hyundai expertise.

Modeled on the Hyundai Atos, the Mercedes A140 and Suzuki's Wagon R, and then customized to Indian tastes, the Santro takes the best of all the cars viz. the driveability of the Atos, the safety & design of the Mercedes A140, and roominess of the Wagon R.

The Santro (which is available in three variants - the L2, GLS1 and GLS2) was launched in September 1998, and the company has targeted a production of 60,000 Santros per year. With sales of 30,000 vehicles in the last eight months HMIL seems to be fairly on target.


The monthly sales of the Santro (from October 98 to August '99 are given below)

The Future

Hyundai Motors India Ltd. plans to build a world-class facility, which will offer quality products and services to the discerning consumer. It plans to enforce the " global optimum production system", setting its goal to achieve the utmost result with the lowest running cost

The Indian operations will play an important role for Hyundai to develop and expand their presence in the neighboring South East Asian countries and plans to export the Santro as SKDs (semi-knockdown kits) and CBUs (completely built units) to the neighboring countries like Pakistan, Bangladesh, Nepal and Sri Lanka.

In fact the Santro has been launched in its parent country under a new name the Visto The body panels and the engine as well as the transmission components are entirely imported from India, and the Visto is being assembled by HMC at their Ulsan Plant. By doing so HMIL has created a record of sorts. As Mr. BVR Subbu, managing director of HMIL says "This is first time in the history of the Indian passenger car industry that an international product has first made its debut in the Indian market and then taken from its shores to parent company's domestic market"

The company also has plans to introduce several new models in the Indian market, and the pre-production and road tests of its next car are already being conducted. Code-named the LC-I, HMIL plans to introduce a mid-sized (1400 - 1800 cc) car in October 1999. Although similar to the Hyundai Accent which already sells in Korea, the LC-1 (like its predecessor the Santro) has been specially designed for the Indian market at the Hyundai Design Centre at Namyong, Korea. The company also plans to launch at a later date a multi-utility vehicle in the Indian market. By the year 2000 HMIL will employ around 3000 workers operating in multiple shifts.

Hyundai today enjoys a market share of around 10% and is looking at the doubling that figure. Given the Indian market's response to the Santro, the company seems to be well on course....