Hyundai Motor Company is taking a proactive approach to meet the growing demand in the rapidly expanding Indian automotive market by acquiring the Talegaon plant from GM India.
On the 16th (local time in India), Hyundai announced that it signed a formal acquisition agreement for the Talegaon plant assets with GM India (GMI) at Hyundai Motor India Ltd, located in Gurugram, Haryana.
The signing ceremony was attended by about 20 personnel from both companies, including Hyundai’s Vice President Kim Eon-soo and GMI’s Vice President Asif Qadri. If the prerequisites, such as approval from the Indian government, are met within this year, Hyundai Motor Company (India) will completely acquire rights to specified land and facilities at the GMI Talegaon plant. (Note: The acquisition amount remains undisclosed due to mutual agreement.)
The decision to acquire GMI’s Talegaon plant is aimed at strengthening Hyundai’s leadership in the rapidly growing Indian automotive market and securing production capacity to actively respond to the swift electrification transition in this sector.
India, boasting the largest population in the world, sold 4.76 million new cars last year, ranking it as the third-largest automotive market globally, following China (23.2 million) and the USA (14.2 million). Out of this, the passenger car market is expected to exceed 5 million by 2030, with a current size of 3.8 million units.
While the automotive markets in major countries such as the USA, China, Japan, Germany, the UK, and Brazil have seen declines compared to five years ago, new car sales in India increased by 18.5% compared to 2017, showcasing remarkable growth.
Moreover, the Indian government has set a goal to raise the share of electric vehicle sales to 30% of total vehicle sales by 2030 and is pursuing strong electrification policies. Prime Minister Narendra Modi is actively promoting the ‘Make in India’ campaign to expand the adoption of electric vehicles and boost the domestic automotive industry.
Last year, Hyundai sold a total of 552,511 vehicles in India, achieving a 14.5% market share, ranking second after Maruti. Up to last month this year, Hyundai maintained its second position with a market share of 14.6% after selling 346,711 vehicles; however, its production capacity has been limited in responding to the growing demand in the Indian automotive market post-COVID-19.
Therefore, by acquiring GMI’s Talegaon plant, Hyundai aims to secure additional production capacity to expand the supply of key models that are in high demand and to rapidly introduce a variety of models in response to future market conditions.
The Talegaon plant that Hyundai will acquire currently has a production capacity of approximately 130,000 finished vehicles annually, and Hyundai plans to begin mass production from 2025 after completing the acquisition process by meeting prerequisites, including approval from the Indian government, within this year.
After mass production begins, Hyundai intends to progressively consider further expanding the production capacity of the Talegaon plant through facility upgrades.
Earlier this year, Hyundai improved the production capacity of its Chennai plant from 750,000 to 820,000 units through line enhancements. Considering this acquisition and the future expansion plans, Hyundai’s total production capacity in India, including existing plants, is expected to reach a maximum of 1 million units.
Hyundai is also planning to establish a local production system for electric vehicles to proactively respond to the rapidly growing electric vehicle market in India, with this acquisition of the Talegaon plant acting as a catalyst for expanding production capacity.
Last year, electric vehicle sales in India were around 48,000 units, with only 1.2% market share in the passenger car segment; however, this number grew more than three times compared to 2021, and by the first half of this year, sales reached 46,650 units, nearing last year’s total.
Furthermore, annual electric vehicle sales are projected to reach 1 million by 2030. To proactively respond at the onset of substantial market expansion, the local production of electric vehicles that meets market needs in terms of product appeal and price competitiveness is essential.
Thus, through the acquisition of the Talegaon plant, Hyundai will additionally secure production capacity for its core internal combustion engine model lineup and utilize the excess capacity of the existing Chennai plant for the new electric vehicle production line.
Hyundai expects that this Talegaon plant acquisition will further elevate its contributions and standing within the Indian automotive industry.
Having entered India in 1996 with the establishment of a sales subsidiary, Hyundai has grown to become the largest automotive exporter in India (on a cumulative basis). Since the commencement of the Chennai plant in 1998, Hyundai’s cumulative investment in the region has reached $6.5 billion, including partnerships with over 40 local suppliers, contributing significantly to the growth of the Indian automotive industry with direct and indirect employment effects impacting approximately 250,000 people.
In May of this year, Hyundai signed an agreement with the state of Tamil Nadu, home to the Chennai plant, to invest 200 billion rupees (approximately 3.2 trillion won) over the next decade for the creation of an electric vehicle ecosystem and modernization of production facilities. Additionally, Hyundai is committed to creating an ecosystem for electric vehicles by establishing a battery pack assembly factory and installing 100 major fast chargers.
Upon completion of the Talegaon plant acquisition and the commencement of mass production in 2025, direct investments in the plant, as well as the attraction of component suppliers and the establishment of logistics systems, will lead to cascading direct and indirect investments linked to vehicle production and sales, contributing to the expansion of the automotive industry ecosystem and the economic revitalization of the local community.
Vice President Kim Eon-soo, in charge of Hyundai Motor’s Asia, Middle East, and Africa region, stated after signing the acquisition contract for the Talegaon plant, “This year will mark a new milestone in Hyundai’s 27-year history in India. Starting from the full-scale operation of the Talegaon plant in 2025, we will establish a cutting-edge manufacturing hub that can contribute to the growth of the Indian automotive industry.”
Lee Sang-jin daedusj@autodiary.kr