The additional production will be at one of the two plants near Chennai
Hyundai Motors India Ltd, the country’s second-largest car maker, signalled an early revival of demand by resuming the third shift at one of its two factories near Chennai from July 10, in anticipation of better sales in the remaining months of calendar 2009.
The decision will lead to an addition of 250 to 300 cars a day, increasing daily production to around 1,300 vehicles. Depending on sales in the coming months, a decision will be taken later on whether to resume the third shift in its second unit.
The third shift was discontinued at the end of last year, as the global slowdown caused both domestic and overseas sales to shrink. The company also did not extend contracts to over 2,000 apprentices who were being trained before induction into the company.
Later on, around 500 of them were hired again. In anticipation of better sales and resumption of the third shift, the company is now preparing to rehire more apprentices.
Speaking to Business Standard, Hyundai Motors’ President, Ashok Jha, said: “We expect demand to increase and there is backlog for some of our models. We also have a backlog of export orders which will be met by increasing production.”
Hyundai earlier aimed to sell around 580,000 vehicles in this calendar year (exports and domestic sales) but now hopes to raise the target to 630,000. It expects improving exports and higher domestic sales, following an anticipated fall in interest rates on consumer loans once the new central government takes charge.
Asked if the company, a wholly-owned subsidiary of the Korean major, is looking at improving this year’s target, Jha said, “Ideally, we’d like to do 630,000 to 640,000, which is the capacity of the two plants together.”
Jha said the company was well on target to hit the 280,000 mark in the domestic market for calendar 2009. The export market has picked up significantly after European governments started offering financial incentives to consumers to change their old cars. The first few months, however, saw the export target fall short by 6 to 7 per cent.
On the possibility of shifting production of the i20 hatchback to Europe following some weeks of unrest at its plant near Chennai, he said they were still to decide on that. Response to the car had been so overwhelming in Europe, he said, that producing the model nearer its market made sense.
On the original decision of establishing the Indian plants as an export hub for the i20, Jha said Hyundai had expected India and the European Union to sign a free trade agreement (FTA). This FTA would have saved Hyundai 5-6 per cent on Customs duty. Now that the FTA is some time away, Hyundai reckons it can save the Customs duty by shifting production to Europe. The key negative, however, is the cheaper cost of labour in India.
