[TusharK]

Hyundai has expressed its interest to set up a new manufacturing unit in Haryana - a stronghold of rival Maruti Suzuki.



Seon Seob Kim, Managing Director, Hyundai Motors India, recently had a meeting with Chief Minister Manohar Lal Khattar, where he expressed the company's desire to set up a new factory in the state.

At present, Hyundai's sole manufacturing facility in India is located near Chennai. The factory has an installed capacity of 7.5 lakh units per annum. Besides serving the domestic market, the factory also builds vehicles for 88 other countries.

The city of Gurgaon in Haryana has emerged as a hub for automakers in recent times. Besides Maruti Suzuki's sprawling manufacturing facility, the city is also home to the corporate offices of a number of brands, including Hyundai.

Source: ET Auto

Link to Team-BHP News

[AutoNoob]

It's a really welcome news for the region. And its not just that Hyundai is planning to setup 'a factory'.

AFAIK, when compared to Japanese OEMs in the region, Hyundai's supplier base for many components is different. Most of those suppliers are currently located in Sriperumbudur town and surrounding area; many being group companies of Hyundai and other Korean suppliers. For them, Hyundai (Chennai plant) & Kia (Anantapur plant) are biggest customers.

With Hyundai setting up plant in Haryana, I foresee many of these suppliers first setting up FG warehouses and then manufacturing unit nearby. Overall, this is going to boost job scenario in the region.

[Rahul Bhalgat]

What does Hyundai gain by setting up the factory in Haryana? Are they looking to tap the supplier base of Maruti Suzuki for cost control?

I thought Chennai would be more cost effective. To export from Chennai is also easier than from Haryana.

Then what could it be? Better labour scenario? Better work culture? Socio - political reasons? Or just paperwork for political reasons?

[a4anurag]

Originally Posted by Rahul Bhalgat

What does Hyundai gain by setting up the factory in Haryana?

I can think of the below points:

1. Delivery times shall be faster for customer base in North India.

2. Transport charges also will be lesser for manufacturer.

3. Lesser load (read manufacturing) on the sole Chennai plant since demand is on the higher side.

The Chennai plant can focus on South Indian region sales + exports.

[AutoNoob]

Originally Posted by Rahul Bhalgat

Are they looking to tap the supplier base of Maruti Suzuki for cost control?

Likely reason, but probably not the key reason. They may share few suppliers. Globally Hyundai works with similar supplier base, particularly for high value components or critical components and exerts tight control over them. As mentioned in my previous post, most are their group companies and other Korean suppliers.

I thought Chennai would be more cost effective. To export from Chennai is also easier than from Haryana.

Cost effective, may be. Hyundai exports to both east and west of India. So, while exporting to west, Mundra port in Gujarat is better choice.

Ease of exporting, not so sure. It involves similar effort to load vehicles from factory, unload at the port terminal. Then loading onto ship.

In Haryana, they may seek to get railway line into their plant. Similar to what Maruti planned in Haryana & Gujarat.

A Manesar-Mundra rail link for Maruti
Source : DNA
Date : 26-Aug-2009

To augment exports, India’s largest car maker has also been seeking a dedicated railway line to transport its cars from the Manesar manufacturing plant to the Mundra port in Gujarat.

At present, the company has to load its cars on to trucks which take them to the nearest railway station in Gurgaon — a distance of 18 km.

Maruti has begun work with the Haryana government and the Ministry of Railways to get a dedicated railway track laid between the nearest station (called Patli) and its factory.

MSIL plant to be connected by broad gauge rail
Source : TOI
Date : 25-Dec-2019

Gujarat Rail Infrastructure Development Corporation Ltd (G-RIDE) has taken up its first joint venture project with Maruti Suzuki India Limited (MSIL) to lay a broad gauge railway line between MSIL’s automobile manufacturing plant near Becharaji to Katosan Road. The 26.6 kilometre long railway line will be laid at a cost of Rs 260 crore.

Then what could it be? Better labour scenario? Better work culture? Socio - political reasons? Or just paperwork for political reasons?

Each region has fare share of local issues. So, Hyundai is probably thinking to diversify the risks. One plant in Tamil Nadu, another in Andhra (KIA) and third one in Haryana. While doing that, it may seek some tax breaks as well.

[Carma2017]

It is interesting that while Suzuki expands its plant in Gujrat and contract manufactures at Benguru (via TKM) and looks for options for shifting it's Gurgaon plant (maybe out of Haryana, who knows!!), Hyundai after setting up Corporate office now plants a "facility". I think everyone thinks grass is greener outside their home locations.

[abhishek46]

Going by the current state of affairs (Covid) etc. it is a wise decision to have manufacturing bases in more than one state.

Not only will this reduce the huge waiting periods, it can also help in business continuity.

[GTO]

Originally Posted by a4anurag

I can think of the below points

Originally Posted by AutoNoob

Likely reason, but probably not the key reason.

Over & above the reasons these excellent posts laid out, it also helps Hyundai in bargaining power with the authorities of their existing locations. Hyundai would want TN to know that it's not the only trick in town, and the company does have many more options for future investments.

Manufacturers hate putting all their eggs in one basket, especially as they move from size "big" to "massive". Hyundai wants to become a 100,000 cars / month manufacturer & I have no doubt they'll get there.

[anjan_c2007]

The right places to be at the right time for auto makers are the auto hubs near Chennai (Sriperumbudur, Kanchipuram dist), in Tamil Nadu and around the Gurgaon-Manesar belt in Haryana. Of course, lots of auto plants means labour issues that have already been cropping up at these locations. Hyundai has a modern multi-million-dollar R&D facility in Hyderabad according to the company's website.

The sheen of India's prime auto hub of yester years namely the Mumbai- Pune belt is getting lost somewhere, perhaps due to the taxes levied by the state government and also its failure to attract auto makers in this industrially developed region. In the 1980's and 1990's this belt was also rocked by labour union problems, when such activities were at their peak.

Newer auto hubs in Gujarat (Tata Motors), Rajasthan (Honda cars and HMSIL) and Karnataka (HMSIL) are also coming up, with auto makers preferring to declutter from the congested industrial hubs.

Location of component makers in the vicinity also plays a key role to rationalise costs.

[TrackDay]

This makes me wonder what Hyundai is planning next. Most of their current targets are met with the sole Tamil Nadu plant, although there are long waiting periods on some models lines. With one more plant they can manage a far bigger output and will be interesting to see what they plan to launch in current decade. Perhaps focus on EV and alternative vehicles ? The move to Haryana is good as it can diversify the risk instead of operating just at one location. Also they can meet North Indian markets from the new plant thus reducing transportation costs.

Speaking of locations, any clue why most media drives take place in Goa ? It is a bit far from most manufacturing hubs and I have seen most makers arranging a mass press/media drive over there.

[landcruiser123]

Great move. Hyundai moving into north India means easier deliveries for their customers in the region as well as taking advantage of the extensive supplier base created by Maruti. Manufacturers (who are suppliers for MSIL) in the metal and plastic part business will be salivating at this news.

Any news on whether Hyundai India is targeting increased exports from Chennai?

[ZenMaster]

One thing that a lot of people are forgetting is Manpower. If this is indeed true, I bet one of the main attraction is the chance to poach a lot of well experienced individuals with in-depth knowledge of how India's No.1 OEM works its magic and also tap into their Suppliers who already have well established facilities who also make products which meets Maruti stringent "Japanese" Quality standards.

There is also Hero- the world's No.2 2-wheeler manufacturer, with so many experience production/manufacturing engineers and and very good supply of skilled manpower.

[Stribog]

Originally Posted by Rahul Bhalgat

What does Hyundai gain by setting up the factory in Haryana? Are they looking to tap the supplier base of Maruti Suzuki for cost control?

I thought Chennai would be more cost effective. To export from Chennai is also easier than from Haryana.

Then what could it be? Better labour scenario? Better work culture? Socio - political reasons? Or just paperwork for political reasons?

I work in logistics and my company handles logistics (not car transport but 3pl / component imports) for blue chip auto cos incl Maruti, Kia and Saic.

The answer is none of the above.

This is purely to cater the Northern and Western markets. Car carrying cos are very few and are a cartel. Road freight costs are high. Putting a plant, albeit smaller to cater to those regions makes eminent sense.