Hyundai Plans $4B Diesel Engine Plant in India

Automaker aims to emphasize domestic market over exports

According to local press reports Hyundai India will build a new diesel engine manufacturing plant to produce up to 150,000 units per year, in three versions. It will be the Korean automaker’s third diesel engine plant in India, and reportedly represents a $4-billion capital investment.

The location of the new plant has not been announced.

"This plant should be ready by the second half of 2013 and will churn out 1.1-litre, 1.4-litre and 1.6-litre engines,” Hyundai India president H.W. Park explained. “The diesel market in India is growing rapidly and we hope to strap these engines on our various models as production starts."

The new engine plant will allow Hyundai to supply both domestic and export demand.

Hyundai is India’s largest automotive exporter but hopes to increase its domestic market share, and Park indicated it is willing to devote existing production capacity to local demand in order to achieve this. However, the group’s assembly plant at Chennai is producing 600,000 vehicles per year and is understood to have a rate capacity of 700,000 units per year.

Park indicated that Hyundai India intends to allocate 65% of its output to domestic supply in 2011, up from 60% this year. The company’s exports fell 8.5% this year, but its domestic sales increased 24%. It plans to introduce a new, smaller model in India late next year or in early 2012. That is aimed at countering new economy-class vehicles from Volkswagen, Ford, Toyota, and Honda, which are gaining Indian market share.

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