Hyundai Motor to invest $845 million to expand India’s Talegaon plant

South Korea’s top automaker Hyundai Motor Co. will invest 70 billion Indian rupees ($845 million) to expand and upgrade its Indian car manufacturing plant in Talegaon, Maharashtra, which Hyundai acquired from General Motors Co. last year.

Maharashtra Deputy Chief Minister Devendra Fadnavis posted on X, previously known as Twitter, on Saturday, “It was a great pleasure to meet Kim Un-soo, MD and CEO of Hyundai Motor India (HMI) along with Executive Director J W Ryu and HMI senior officials. They apprised me of HMI’s Rs 7000 crore investment in Talegaon, Pune.”

“They also sought advice and assistance on various aspects and I assured them on behalf of our government of our full support to ensure (the plant's) smooth implementation,” he said.

The Maharashtra deputy chief minister also posted on X several photos taken with Kim and other Hyundai executives visiting his office.

Hyundai and the government of Maharashtra will sign a memorandum of understanding on the investment when Hyundai executives visit Davos, Switzerland for the World Economic Forum this week, he said in his post.

“We are absolutely delighted and welcome Hyundai in creating a world-class modern automobile manufacturing facility in Maharashtra,” he said.

The deputy chief minister and Hyundai officials didn’t provide details of the investment, including its time frame.

FIRST INVESTMENT BEYOND TAMIL NADU

If the investment is made, it will mark Hyundai’s first heavy spending beyond Tamil Nadu where it has been investing and doing business for more than 25 years.

Hyundai operates a plant in Tamil Nadu’s capital city of Chennai, dubbed the Detroit of Asia, with an annual production capacity of 820,000 vehicles.

In August 2023, Hyundai signed a deal to take over a GM car manufacturing plant in Talegaon. The Korean company plans to increase its output capacity to 1 million units with the acquisition of the GM factory and more investment.

The Talegaon factory, which currently has an annual production capacity of 130,000 vehicles, is slated to begin mass production in 2025 after a revamp.

Hyundai said in May that it will invest 200 billion rupees in Tamil Nadu over the next decade to strengthen its presence in India, which works as Hyundai’s South Asian hub.

Hyundai sold 765,786 vehicles in India in 2023, up 9% from 700,811 units in 2022. Local sales from Hyundai’s Indian plant increased 9% on year to a record 602,111 units while exports from the country rose 10% to 163,675 units.

THE WORLD’S NO. 3 CAR MARKET

India is the world’s No. 3 auto market after China and the US and among the fastest-growing EV markets in Asia.

India is also the world’s most populous country with 1.43 billion people, surpassing China last year.

Currently, Hyundai and its affiliate Kia Corp. are together the No. 2 carmaker in India, controlling a fifth of the market, behind only top carmaker Maruti Suzuki India, the local unit of Japan’s Suzuki Motor.

Hyundai said in October it plans to ramp up the production of its compact sport utility vehicle Exter in India to capitalize on the void in the entry-level SUV market in the South Asian country.

The Exter is the second best-selling SUV in India after Tata Motors’ Tata Punch.

In September, the Korean carmaker said it ranked top in India’s mass-market satisfaction segment, citing an annual survey by the Federation of Automobile Dealers Association of India.

With only a handful of companies offering electric cars, India’s EVs accounted for less than 2% of its total vehicles. The Indian government is pushing to expand EV adoption by incentivizing carmakers and subsidizing consumers to raise its share of EVs to 30% by 2030.

Japanese carmakers, which have been the dominant players in Southeast Asia for decades, have also been increasing their investments in India.

Mitsubishi Motors Corp. recently set up a manufacturing plant with an investment of over 2 billion rupees in Talegaon, Maharashtra.

Write to Nan-Sae Bin at binthere@hankyung.com

In-Soo Nam edited this article.