It is learnt that a team from HMC’s commercial vehicle division in Korea had visited in India in May-June this year to study the market and meet potential partners. “The team also met a number of Hyundai car dealers in India to know about their interests in the commercial vehicle business,” said a person familiar with the development.
The investment plans have not been finalised. But experts said a truck-manufacturing facility might require an investment of Rs 4,000-5,000 crore.
Hyundai, which for years had the tag of being the largest car exporter from India (it is now the second-largest, after Ford), could use India as a base to ship commercial vehicles to neighbouring markets.
That is the model that most global players have followed in India, which is a low-cost and competitive-manufacturing base due to its well-developed auto component industry.
India is a large commercial vehicle market, with annual domestic volumes of about 302,000 medium and heavy commercial vehicles and 411,000 light commercial vehicles. Manufacturers also export about 108,000 commercial vehicles a year.
Hyundai Motor India generates annual revenues of $5 billion and India happens to be HMC’s largest market for cars after China and the US. India accounts for about 14 per cent of HMC’s global car sales. Early this year, HMC’s affiliate Kia announced an investment of $1.1 billion to set up a car-manufacturing unit in Andhra Pradesh, expected to be ready in 2019.
“India offers a unique opportunity in the commercial vehicle segment and a stable demand outlook, driven by the government’s focus on building infrastructure and housing for everyone. It is not possible for any global commercial vehicle maker to ignore the Indian market as other major markets, including China, are either declining or are stagnant,” said Amit Kaushik, managing director of Detroit-based automobile
consultancy Urban Science in India.
A scappage policy for old trucks, currently under the government’s consideration, could also add to demand.
Almost every major global commercial vehicle player such as Volvo, Daimler, MAN, and Scania has entered the Indian market in the last decade. However, the market is dominated by two domestic players, Tata Motors and Ashok Leyland, in the heavy commercial vehicle space, while Mahindra & Mahindra leads in the light commercial vehicle segment.
Hyundai’s top competitor in the Indian car market, Maruti Suzuki, entered the light commercial vehicle market in India last year but is yet to make a significant presence.