Chennai, Nov 14 (TruthDive) : Hyundai Indian plant in Sriperumbudur,50 kms from here will now concentrate more on quality than quantity.
This move by its Chairman Chung Mong-Koo, is not widely accepted by the executives who are clamouring for expansion of its manufacturing capacity. The demand far outstrips the supply and the Chennai plant works in three shifts and every car that comes out is sold. The recent move is received with scepticism.
Currently it is second to Maruti Suzuki in India and both are top favourites for the low-cost small car segment. In this scenario, the auto major not going in for expansion and aiming for an upper market brand might work with Europe but not with emerging markets like India and South Africa.
Hyundai Chairman taking lessons from Toyota which expanded widely to sell 8 million cars globally faced engineering and quality issues in its rush to sell more. He wants to model his new business plan on the Samsung turning from a cheap producer of electronics to a manufacturer of high- tech and high-end products.
Few years back, the Chairman was for expansion of its capacity but executives said they were facing quality issues and it was not on the same platform as Toyota and Volkswagen.
Now the roles have been reversed with executives asking for more cars but the Chairman is not for it.
Hyundai has a 14.4% share in the passenger vehicle market in India which is much more than their rivals Nissan, Ford and Volkswagen put together. Going by the current estimate, India will need 250,000 cars and Ford whose present capacity is not fully utilized, has pumped in $1 billion for expansion.
Investors feel that Hyundai’s freeze on expansion will only bring down its market share in India. In US, it has already lost to other auto majors. Chennai plant was exporting 50% of its output and it came down to 40% and will further reduce it to 35%. This is to juggle between exports and domestic markets.
Hyundai’s largest sales are for Santro and i10 models and its rival is Suzuki’s Alto priced at $4500. Hyundai opened a plant in China to meet demands of Asia’s largest economy.