SOUTH KOREA REPORT
Hyundai Motor has begun the initial public offering (IPO) process for its Indian subsidiary to further develop the company. The IPO is expected to raise $3 billion, making it the largest IPO ever in India. Over the past 20 years, Hyundai Motor has exported 3.6 million Indian-made passenger cars to more than 150 countries, including emerging markets, making it the largest exporter among India-based automakers. India is now Hyundai Motor’s second largest market after North America, surpassing its home market of South Korea.
The driving force behind Hyundai Motor’s success has been its emphasis on local sourcing to maintain affordability and lower costs. The company sources approximately 90% of its parts and materials from the state of Tamil Nadu, around its southern manufacturing hub of Chennai, and works with 194 primary suppliers in India. This has allowed Hyundai Motor to become more cost efficient in its production and supply chain, resulting in improved profit margins and manufacturing processes.
Hyundai Motor is aggressively investing in its plants in Tamil Nadu and Maharashtra and plans to increase the combined annual production capacity of the two plants to 1.82 million vehicles. Most of this capacity will be for overseas markets. The export market is a driving force as the average selling price of vehicles for export is higher than that of vehicles shipped to the Indian domestic market. Hyundai Motor’s investment in the Indian market is focused on EVs and EV components. So far, the company has been importing and selling EVs, but plans to start local production later this year.
Source: The Nikkei
PSR Analysis: While Suzuki has traditionally enjoyed a large share of India’s fast-growing automotive market, Hyundai Motor has been increasing its presence in recent years. Of course, Hyundai Motor is not the only one eyeing the Indian market; Chinese brands are also aggressively expanding their business in India.
MG, which SAIC operates in partnership with Indian steelmaker JSW, has the second largest share of EV sales after Tata. BYD is also trying to increase its sales share, and competition from Chinese companies is inevitable for Hyundai Motor.
As India also moves toward electrification, there is a strong possibility that, as in Southeast Asia, the existing power structure will change drastically. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
