Hyundai India defers third shift plan on slowdown fears

August 7th, 2008 - 2:46 pm ICT by IANS  

By Venkatachari Jagannathan
Chennai, Aug 7 (IANS) India’s second largest car manufacturer Hyundai Motor India Ltd. has deferred a decision to introduce a third shift at its new plant near here, according to a top company official, in the wake of predictions that the Indian auto industry will slow down in the coming months following rising interest and input costs. “We are watching the situation and a decision will be taken accordingly,” Ashok Jha, the company’s president, told IANS.

At the time of the Kappa engine launch in July, company officials had said that a third shift may be introduced at its new plant having a capacity to produce 300,000 units per year.

Working in two shifts, the new plant at present rolls out around 415 vehicles per shift.

The night shift, if introduced, would add another 360 units to the output thereby taking the total production at the second plant to 1,190 units per day.

Hyundai Motor’s first plant with an annual capacity of 300,000 units works in three shifts and rolls out around 1,080 units per day.

The company would have to hire another 1,200 workers if one more shift is added as all the plants - vehicle assembly line, paint shop, engine and transmission plants - have to function in tandem, company officials said.

While the domestic market is expected to be sluggish, there is a sizeable export order backlog.

The Korean car group, ranked seventh largest car maker in the world, has made India its small car hub. All its plans are drawn up taking into account the global situation and not just the Indian market.

Shipping out cars from its Irrungattukottai plant near Chennai, Hyundai Motor is India’s largest car exporter.

Depending on the demand, the company continuously alters the production ratio between cars meant for domestic and overseas markets.

During March-April, the demand for cars in India will be high. Hence production for the local market will be around 55 percent and the balance for exports.

On the other hand, during June and the Christmas season the overseas demand will be high and the production for overseas markets will be 55 percent of the total rollout.

According to Jha, Hyundai Motor is confident of selling 5.3 million cars this year - domestic and exports put together.

“We are working out our strategies to meet the sluggishness in the domestic market,” he added but declined to elaborate further.

According to officials, Hyundai Motor has rolled out around 10,000 cars fitted with its new 1.2 litre aluminium Kappa engine for the domestic market.

The current month’s production is expected to be entirely exported, company officials said.

Queried about the launch of i20, a new model, Jha said the car will be launched this October.

“The launch of i20 does not mean phasing out of Getz. The latter has good demand,” he said.

Dismissing reports that the company is looking at Andhra Pradesh to set up its third manufacturing plant, Jha said: “At present we don’t have plans for a new plant”.

The Andhra government had written to Hyundai Motor to consider the state for locating its third plant in India as the company has already used up all the 520 acres allotted to it by the Tamil Nadu government.

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