[Aditya]

South Korean car manufacturer, Hyundai has started using its plants in Turkey and Czech Republic to build cars to cater to European countries. The company has stopped shipping cars built at its Indian facility in Chennai, Tamil Nadu to European markets. With this step, the company's exports will come down to 1.9 lakh units from last year's 2.53 lakh units - a drop of 25%.

Hyundai is India's largest car exporter and accounts for about 45% of the country's total car exports. The Chennai plant has the capacity to roll out 6.8 lakh cars annually and had a capacity utilisation of 98.5% last year.

Hyundai claims that the step to halt exports to Europe has been taken so that the plant can concentrate its efforts on production for the Indian market. The company has launched 4 new models in the country last year and needed to create capacity. Therefore, the production of the Euro-spec i20 hatchback was shifted to the Turkey plant. In future, all the Euro-spec i20 and i10 cars will be built at the company's manufacturing facilities in Turkey and Czech Republic. The recently launched Elite i20 will also be built at the Turkey plant.

Hyundai however, intends to keep India as its global export hub for small cars. The Chennai plant will continue to build cars for Latin America, Middle East, Asia and Australia.

Source: ET Auto

[tsk1979]

I believe part of the reason could be anticipated discontinuation of Import duty relief provided to India by Europe if the FTA does not work out.
India can export cars to Europe and nominal import duty is charged. EU has been asking India to reciprocate, atleast partially(as opposed to the 110% customs duty for CBU).

Eventually, if it does not happen, EU may stop giving the SOP to India. This will make the business non-competitive for Hyundai.

So they may have done this in advance, as last minute production changes are usually not possible.

[StarrySky]

Originally Posted by tsk1979

I believe part of the reason could be anticipated discontinuation of Import duty relief provided to India by Europe if the FTA does not work out.

If this is an indication that Hyundai believes FTA will not work out, then it's bad news. We will be stuck with overpriced CBUs for even longer.

On the other hand, going by the figures in the report (6.8 lakhs capacity and 2.53 lakhs exports last year) and Hyundai's average sales of nearly 33000 vehicles per month in the last one year in the Indian market, it doesn't leave too much capacity for an expansion in the Indian market. So this could also be an indication that Hyundai expects its sales to grow in the Indian market, while in Europe the sales may be stagnant. Also, Hyundai may be wary of Honda's resurgence in India.

[GetLife]

Apart from challenges on the export front as stated in earlier post, it may be good news Indian customers, to get deliveries without much waiting time, if at all there is any on their newer launches - Elite i20, Xcent and Grand i10. This will help them consolidate their positioning in Indian market.

[CrAzY dRiVeR]

Originally Posted by GetLife

it may be good news Indian customers,

I dont think so! Take the old generation and new Elite i20 for example. The old one was launched similar to the European version, even had features like 6 airbags which were not even heard of, in the segment!

However, the newer one seemed particularly 'Indianised'. And with this new announcement, it is evident why its so!

[ajaypjayaraj]

Read on the new i20 thread that rear disc brakes have been swapped with rear drums on E i20 and surprisingly the newer generation car loses out on DRLs as compared to the previous generation. All part of focusing on Indian market, now that they don't need to meet European standards?

Suddenly the strange omission of things begin to make sense!

[Chetan_Rao]

I'll repeat what I said in a Ford discussion thread a year or so ago. 'Made for/focused on India' is just corporate-speak for 'Won't sell anywhere else'.

The strange 'feature downgrades' in the new i20 starting to make sense now. So there will now be one 'India and emerging markets' spec and one 'Euro' spec for all Hyundais? Shame.

[vb-saan]

Originally Posted by CrAzY dRiVeR

I dont think so! Take the old generation and new Elite i20 for example. The old one was launched similar to the European version, even had features like 6 airbags which were not even heard of, in the segment!

However, the newer one seemed particularly 'Indianised'. And with this new announcement, it is evident why its so!

This could be one prominent reason. Instead of manufacturing two different grades, why not shift the whole manufacturing of the Euro spec cars closer to the target markets.

[itwasntme]

Good time to keep in mind that Hyundai's global management has always felt deeply 'betrayed' by the endemic and relatively viokent labour troubles at their Chennai plant. Due to multiple reasons (another topic altogether!), they have never been able to hit the 'sweet spot' in their IR.

Googling for 2 minutes will find multiple hits on Hyundai's threats to move out production from Chennai. See a few examples below:
http://www.just-auto.com/news/labour...0_id99260.aspx
http://www.domain-b.com/companies/co...ion_india.html
http://www.siasat.com/english/news/h...aunches-strike
http://ibnlive.in.com/news/workers-t.../207019-7.html

Some of it is no doubt 'posturing' to pressurise the unions, labour commissioners, politicans etc. However, from what I can glean from media reports, they always had plans to move the European i20 to EU-based factories. Today's news is simply execution of that conscious strategy!

[DWind]

The article posted by OP has only info on Hyundai stopping exports to cars made for EU. But does Hyundai export to any other region from here?

[tsk1979]

Originally Posted by DWind

The article posted by OP has only info on Hyundai stopping exports to cars made for EU. But does Hyundai export to any other region from here?

Yes, pretty much everywhere in Latin America and other developing countries.

[Gannu_1]

Originally Posted by DWind

The article posted by OP has only info on Hyundai stopping exports to cars made for EU. But does Hyundai export to any other region from here?

HMIL currently exports to around 120 countries across EU, Africa, Middle East, Latin America, Australia and the Asia Pacific.

HMIL

[arnabchak]

Originally Posted by Chetan_Rao

I'll repeat what I said in a Ford discussion thread a year or so ago. 'Made for/focused on India' is just corporate-speak for 'Won't sell anywhere else'.

The strange 'feature downgrades' in the new i20 starting to make sense now. So there will now be one 'India and emerging markets' spec and one 'Euro' spec for all Hyundais? Shame.

The case is not limited to the i20 but was actually pioneered by the Verna.

So the bosses in Hyundai India have taken a conscious and informed decision.

The related Verna thread:

http://www.team-bhp.com/forum/indian...omissions.html

[latentpotential]

While the discussion on the manufacturing quality will go on, this also means a lot less inflow of valuable foreign exchange for the country. Perhaps a way to put pressure to improve the duty structures?

[harpreetkanwar]

I for one hope this pressurizes the government to look into FTA's. And why shouldn't the EU hike the duty on cars coming from India in this era of Global Free Trade, when India can't reciprocate the same. A lot of people are moving up to luxury cars and those who have driven them, are saving up for the uber-luxurious ones, the ones that can't necessarily be brought in via the CKD route, owing to the more than double price tag they carry.

Also, the "indian focused cars funda" is just a shame when at the same time we are talking about NCAP like safety programs being implemented in India, if at all this move by Hyundai is a signal towards India's unwillingness to sign the FTA for automobiles.

The argument that Indian manufactures would suffer with the FTA's is simply wrong, it would just make already "cheaply built" cars even cheaper when it comes to Safety, comfort and quality.