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CHENNAI, India -- Korean carmaker Hyundai Motor will spend $60 million to make India the global production center for its Santro model.
"We intend to shift the production base of Santro from South Korea in the last quarter of 2003 and base Hyundai Motor group's exports from India," B.V.R. Subbu, president of Hyundai Motor India Ltd. (HMIL), told reporters over the weekend.
Hyundai aims to export 40,000 Indian-made Santros a year, mainly to Europe, once production ramps up. Hyundai's factory in Chennai is its biggest outside Korea and exported just over 6,000 cars last year.
Subbu said Hyundai will invest "$60 million every year" to increase the plant's output to 150,000 cars in the next financial year and to 200,000 sometime between 2003 and 2006.
Aimed at Indian market
The Santro is a four-cylinder, four-door family hatchback. It was designed for the Indian market with an eye toward coping with poor road conditions, heavy traffic and high temperatures.
The model launched in 1998 in India, where it accounts for the bulk of Hyundai's sales. As well as planning to export to Europe, Hyundai sells the car in Korea.
HMIL is bringing out an automatic version of the Santro over the next six months that will account for 10 percent of production.
Subbu was speaking as HMIL, a fully owned subsidiary, unveiled its sprty Accent Viva version of its Accent sedan.
IPO plans shelved
Hyundai's investment schedule means its Indian subsidiary will shelve plans to sell stock to the public.
"At the moment, our plan for an initial public offering is on the back burner," Subbu said, according to the Press Trust of India. "We are keen on building capacity and bringing newer models, talk about IPO later."
Subbu said the Santos will get a design overhaul by 2004 to meet environmental standards. But the changes will be minor.
"The basic design will more or less remain the same," he said. "There is no question of changing or replacing it with a new model."
Seoul-based Hyundai last week posted a 46 percent increase in first-half earnings (full story).
Hyundai stock is down 0.6 percent late on Monday morning, at 33,400 won, on a day most Asian stocks are trading lower.
