Hyundai Motor to acquire GM's India plant

Industry

Published: 16 Aug. 2023, 17:46 Updated: 16 Aug. 2023, 17:53

Hyundai Motor to acquire GM's India plant

Hyundai Motor Executive Vice President Kim Un-soo, left, shakes hands with Asifhusen Khatri, vice president at General Motors, after signing a deal to acquire the U.S. automaker's plant in India on Wednesday. [HYUNDAI MOTOR]

Hyundai Motor is acquiring a General Motors automobile plant in Talegaon, India, as the Korean automaker eyes the South Asian country as a new manufacturing base to replace China.

Hyundai Motor said Wednesday its Indian subsidiary signed a legally-binding asset purchase agreement with General Motors India to acquire its manufacturing facility in Talegaon, located in the western state of Maharashtra, which covers the plant itself and certain machinery and manufacturing equipment there.

It is the second time Hyundai is buying a General Motors plant overseas, after its purchase of a General Motors car factory in St. Petersburg, Russia, in 2020.

The deal size was not disclosed and the deal will be finalized by the end of the year.

General Motors' manufacturing plant in Talegaon, India [GM KOREA]

The Talegaon plant has an annual production capacity of 130,000, which will likely boost Hyundai’s production capacity in India to 1 million.

Mass production will restart at the plant in 2025, according to Hyundai. General Motors withdrew from its India business in 2017 and the Talegaon plant ceased operations in October 2020 after two decades of production.

"This year will set a new milestone for Hyundai's 27-year history in India," according to Hyundai Motor India, Middle East and Africa Strategic Region Executive Vice President Kim Un-soo. "Starting with the Talegaon plant that will begin operation in 2025, Hyundai will build a state-of-art manufacturing hub that can contribute to the Indian auto market."

Hyundai currently has two plants in Chennai in Tamil Nadu in the southernmost part of India, with a capacity totaling 850,000.

As a country with the largest population, India has the world’s third-largest auto market after China and the United States and ahead of Japan. Around 4.73 million vehicles were sold in India alone last year, up 25.7 percent.

Hyundai employees work at its manufacturing plant in Chennai. [HYUNDAI MOTOR]

Hyundai Motor has gradually expanded sales in India in recent years, taking the No. 2 spot behind Maruti Suzuki, according to data from the Society for Industrial and Applied Mathematics.

Hyundai Motor and Kia sold a total of 552,511 vehicles in the Indian market in January, an all-time high monthly figure, with the combined share increasing to 14.5 percent.

Sales continued to grow this year, with the two automakers selling a total of 346,711 vehicles through the end of July, maintaining 14.6 percent of the market share.

Hyundai Motor is eyeing India as the new manufacturing base for its electric vehicle strategy after the sharp drop in Chinese sales in recent years due to tensions over the deployment of the Terminal High Altitude Area Defense system, or Thaad.

India is a highly potential market for EVs.

Sales of EVs in India surged three-fold last year compared to the previous year. A total of 46,650 EVs were sold in the first half of the year in India, equivalent to the total EVs sold in 2022.

Hyundai Motor Group Executive Chair Euisun Chung inspects the company's research center in India earlier in August. [HYUNDAI MOTOR]

The Indian government is actively promoting its EV policy, with a goal of making EVs account for 30 percent of vehicles on the road by 2030.

India's EV market is estimated to grow to 1 million by 2030.

In May, Hyundai Motor announced that it will invest around 200 billion rupees ($2.45 billion) in India over the next 10 years to build a battery pack assembly plant and 100 EV charging stations in Tamil Nadu.

Hyundai Motor hopes to sell 595,000 vehicles in India this year, up 7.2 percent. That would be the fourth largest year-on-year increase after China, Korea and North America.

BY SARAH CHEA [chea.sarah@joongang.co.kr]