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India's second-largest carmaker Hyundai Motors India Ltd on Wednesday won a major vote of confidence from its South Korean parent company as it announced the opening of a second plant in the country with a capacity of 150,000 units.
The plant will come up next to HMIL's existing facility near Chennai by 2007 and it will enable the company to churn out 400,000 cars each year.
"We desperately need to expand our production in order to meet the increasing demand in the Indian auto market, which is growing by over 12 per cent every year, and to top our competitors," said Hyundai Chairman Chung Mong-Koo in a statement issued on Wednesday.
The announcement comes a few months after market leader Maruti Udyog announced that it would invest Rs 6,000 crore (Rs 60 billion) along with its Japanese parent, Suzuki Motor Corporation, in expanding its capacity in the country.
Besides catering to the burgeoning domestic car market, a second automobile plant in India will also make the HMIL a regional export centre. HMIL will export cars to Europe, South America and West Asia.
BVR Subbu, president, HMIL, who refused to comment on the amount of investment required for the new plant, said the company had established itself as a globally competitive manufacturer, which tipped the scales in India's favour. Hyundai has so far invested close to $900 million in India.
Hyundai said it was targeting sales of 250,000 cars in India this year -- a 16 per cent increase in volumes. By 2010, the company plans to sell nearly 400,000 cars.
Currently, HMIL has a 16.5 per cent share of the 900,000-unit Indian car market, estimated to be growing at 15 per cent annually. According to last available figures, HMIL's turnover in 2003 was Rs 4,060 crore (Rs 40.6 billion) and net profit was Rs 18.2 crore (Rs 182 million).
According to the $21 billion firm, which controls more than half of the Korean car market, the opening of the second plant in India is part of its plans to enter the league of the top five car manufacturers in the world.
In addition to its current successful compact vehicle operations, HMIL had recently also said that it was also looking at setting up of a light commercial vehicles plant in India.
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