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Hyundai to roll out utility vehicle in India after 2000

Hyundai Motor Company of South Korea is working towards introducing a multi-utility vehicle and a sports utility vehicle in India post year 2000.

This would be part of the chaebol's second phase of operations in India through its wholly-owned subsidiary -- Hyundai Motor India Limited, HMIL executive director (marketing and sales) J H Kim said on the sidelines of a conference marking the completion of Hyundai's first year of operations here.

''In the second phase, we are looking at infusing fresh equity from the parent company as also ploughing back profits from the Indian subsidiary,'' he added. When the second phase is completed, Hyundai would have invested $ 1.1 billion in India, among the largest by an automaker in the country.

The company, he said, is studying all the existing models in the product portfolios of both Hyundai Motors and Kia Motors to determine the final model for India. ''The study was initiated last year and is still on. We would select one model and then modify it to suit Indian driving conditions.''

The vehicles being studied include Grace, Starlex, Fo and Jeep from Hyundai, and Sportage, Currence, Carnival and Towner from Kia. ''One of these eight models would be selected for India.''

The utility vehicle, he said, would be the company's next offering after the mid-size sedan accent. ''Presently, we want to concentrate all our energy and efforts into making the Accent a success in India and after a year of its launch, the utility vehicle would be introduced.'' The Accent is slated to hit the streets next month.

Regarding the second phase of investments in India, Kim said, a good chunk of the fresh investments would come in the form of fresh equity from the parent company. Besides, fresh debt would also be raised from local banks and financial institutions.

''We have not initiated any talks with the banks as yet, but we do not foresee any problems in getting the funds, and banks are keen to lend to us now.''

Besides, the company expects to breakeven in the year 2000 and use internal accruals to meet further demand for funds.

Hyundai Motor India has already decided to make the Accent Euro-II compliant at launch. Powered by 1500 cc, 12-valve, four cylinder, the Accent will have an indigenisation level of 70 per cent from the start of its commercial production in the country.

HMI has already started pilot production of the car at its Madras plant and the mass production is expected to begin by early next month. Production of the new Alpha engine that will power the car has also commenced.

HMIL is a wholly-owned subsidiary of the $ 8.24 billion Hyundai Motor Company of South Korea.

Riding on the huge demand for its small car Santro, Hyundai Motor Company of South Korea had projected to advance its breakeven point in India by a year, a top company official said.

Hyundai expects to break even with its investments in India this fiscal and start recording profits next year, Kim said.

Pursuant to this, the company would be divesting a part of its equity in HMIL. ''We would be selling off equity in the company next year. But it is yet to be decided whether we would go in for a public offer or privately place with a single party,'' Kim said.

HMIL had, in a presentation to some Indian banks a few months before its Madras plant was commissioned, had projected a loss of Rs 1.51 billion for 1998-99. In 1999-2000, it expected to make marginal losses and in the first fiscal of the new millenium, it hoped to break-even.

However, with the sales of the Santro spurting up, these projections have been altered and break-even periods advanced.

The company hopes to achieve breakeven at around 70,000 units.

Regarding the Accent, Kim said initially the company expects to sell around 1,000 units of the car per month.

''We have a maximum production capacity of 7,000 units per month, which can be extended to 8,000 units with the Accent. However, if demand grows beyond this level, we would look at adding another shift and going into third shift of production.''

The company has forecast that the Santro sales would dilute over the next few months as demand in the segment has already reached a saturation point. ''So, ideally, demand for the Santro would slow down giving us enough capacity to accomodate the Accent.''

Meanwhile, HMIL today celebrated the first anniversary of the Hyundai Santro in the country by announcing an extended warranty for the second year, upto a total mileage of 50,000 km.

This extended warranty will be offered free to all those customers who buy the Santro as of September 30,1999, and is over and above the existing first year warranty already valid on the car.

Announcing the extended warranty scheme, Kim said: ''To mark the Santro anniversary celebrations, we have decided to say 'Thank You' to all our existing customers by offering them an extended warranty of 12 months.

''This extended warranty is also a reflection of the confidence that the manufacturer has in its product, and the reliability of the Santro has been proven without doubt by the relatively trouble-free performance of the car over the past months on India roads,'' Kim added.

At the time of the launch, the company had announced a year's warranty on the Santro, and a six-month warranty on its spare parts.

UNI

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