Chennai: Even as it exports the Accent, its mid-sized car from India, Hyundai Motor India Limited says it will not export the recently launched premium Verna, which also belongs to the mid-size segment.
According to managing director and CEO Heung Soo Lheem, the Verna is also being rolled out from Hyundai's plants in Korea, China and Turkey, apart from India. Theae plants will take care of Verna's export markets.
Lheem also clarified that the decision had nothing to do with the 55-per cent import content of the Verna. "The local component content in Verna will go up to 70 per cent in a year's time." The company currently imports the engine components for the new model.
In the last 10 years that Hyundai Motor India has been in existence, it has become the largest exporter of cars from the country. Last year the company earned nearly $600 million from the exports of around 1-lakh units of its small car Santro and the mid-size Accent.
"We export to 55 countries and soon the number will increase by ten more." Adding, he says, "The decision to export is not related to the domestic demand and the huge production capacity that is in place."
"India is important for our overall strategy. Geographically, the country is located advantageously for our other markets. The Indian plant was conceived with an idea of making it as the manufacturing and export base for small cars."
Lheem attributes the success of Hyundai Motor India to government support as much as to the plant being set up on schedule and the company's investments along with those of its vendors. Says Lheem, "Actually manufacturing and exporting cars from India has some cost disadvantages. The prices of plastics, rubber and water are high. We overcame that with difficulties."
Meanwhile Hyundai Motor India will complete the construction of its 3-lakh unit second plant by the end of this year. With this plant the production capacity of the company would double to 6 lakh per year.
"The pilot production will start in January 2007. Once the new plant starts commercial production, 50 per cent or three lakh vehicles will be exported," he says.
The company's second phase of investments also includes an engine and transmission plant and a research and development (R&D) centre. "The total investment for the second phase of the expansion will be around $1 billion," he remarks.
Though Hyundai Motor India's major production base is located near Chennai, the company is also considering Andhra Pradesh for setting up the R&D centre. "This depends on the incentives the governments of Tamil Nadu and Andhra Pradesh are willing to offer," says Lheem.
The R&D centre would entail an investment of $40 million and will ultimately employ around 1,000 people and would employ computer aided design (CAD) and other sophisticated software. "The decision on the location will be taken in two months," he adds.
Verna not to replace Accent
Scotching rumours of the Accent going to be replaced by Verna in India as in other markets, Lheem says, "We will continue with the Accent. There is no plan to withdraw the model or revise the price downwards." He disagree with the view the price difference between the Accent and the Verna is marginal.
According to Arvind Saxena, vice president, marketing and sales, Hyundai Motor India, the mid-sized car market has products in the price range of Rs4.5 lakh to over Rs6 lakh. The Accent, he says, is for the conservative customer, while the Verna offers more advanced features. "Verna will help us in growing volumes."
The new model comes in the petrol and diesel variants. The petrol engine uses the variable timing valve train (VTVT) technology, which lends the engine flexibility of valve timing based on load and speed. The diesel version of Verna has variable geometry turbocharger (VGT) along with the common rail direct injection (CRDI) technology.
Incidentally, the employees of Hyundai Motor India wear a badge that simply reads "2030". What is 2030? A target to be reached by the year 2030? The answer is that the tag proclaims the company's target of 20 per cent market share and the sales figure of three lakh, of which one lakh would be exported. Last year the company sold 2.52 lakh cars including exports.
Remarks Lheem, "The target turnover this year is $2 billion around Rs9,000 crore. With a market share of 18.5 per cent in the Indian car market we will increase that to 20 per cent this year. And in couple of years time the market share we target is 55 per cent."