Besides greenfield ventures, Chennai is also seeing existing auto manufacturers scale up their operations. The country’s second-largest car manufacturer, Hyundai Motor India Ltd (HMIL), for instance, is looking to expand capacity to 660,000-670,000 units a year at its facility in Chennai next financial year.
The passenger vehicle segment has grown by over 33 per cent between April and October this year to 1,408,475 units from 1,053,264 sold in April-October 2009. Hyundai’s sales in the domestic market increased 20 per cent in the period.
With the growth momentum expected to be sustained, the company is preparing to roll out another 60,000-70,000 vehicles from the plant at Chennai, which has an installed capacity of 600,000 units a year. Arvind Saxena, director and board member (marketing & sales), HMIL, says, “We will initiate de-bottlenecking processes to make available capacity at the premises. With the measures in place, our capacity is set to go up by another 10 per cent.”
The company declined to specify the investment it is making to enhance capacity at Chennai. HMIL shifted the production of 40,000 units of its compact i20 to a plant in Turkey earlier this year. The freed capacity may be utilised to manufacture a new sedan that the company is planning to introduce in the domestic market to replace the Elantra.
HMIL, however, does not have plans to establish a new plant at present. “We export cars to over 110 countries. However, with international markets still recovering from the slowdown, the surplus can be diverted to meet demand in the domestic market. Increased capacity should be sufficient to meet demand in the next financial year,” adds Saxena.
The company expects to sell 590,000 units in 2010-11, compared with 561,000 units last year. It is planning to focus more on the domestic market with the aim to sell 340,000 units this year, compared with 290,000 units last year.
HMIL had announced its intention to set up a diesel engine plant in the country and feasibility studies are on for the project. A decision is likely to be taken early next year.
The company, which currently has seven product offerings spanning the compact car, mid-size sedan, sports utility vehicle and premium segments, is working on bringing a full line-up to India over the next three years.
HMIL recorded sales of 52,225 units in October this year, up 0.9 per cent over 51,735 units in October last year. While domestic sales grew a robust 22.7 per cent, exports remained in the red by over 25 per cent to 17,500 units last month. The company registers nearly 90 per cent of its sales from the compact car segment.
