Official: Hindustan Motors to build Isuzu SUVs at Tiruvallur

Indian automaker Hindustan Motors, a part of the C.K. Birla group, will contract manufacture (assemble) the Isuzu D-Max pick up truck and MU-7 SUV at its Tiruvallur factory, off Chennai. Hindustan Motors is saddled with additional capacity at the Tiruvallur factory as it has stopped producing three cars: the Lancer, Cedia and Pajero SFX. These cars, along with the Outlander, have been discontinued from the Indian car market.

Also, Hindustan Motors's Tiruvallur facility has been operating at a reduced output for a while now as the automaker's car making operation with Mitsubishi hasn't been doing well at the hustings. Isuzu and Hindustan Motors have a history of co-operation. Hindustan Motors collaborated with Isuzu for the 1.8 liter petrol and 2 liter diesel engines, used in cars such as the Ambassador and the now-discontinued Contessa.

The contract manufacturing arrangement that Hindustan Motors has bagged from Isuzu will be a temporary one. Japanese automaker Isuzu, for its part, is putting together a brand new factory at Sri City, in Andhra Pradesh (strategically situated at the Tamil Nadu-Andhra Pradesh border). The factory will be ready to produce cars by 2015, until when the D-Max and MU-7 will be assembled by Hindustan Motors at Tiruvallur.

The SUV and pick up trucks will arrive from Thailand, in the form of completely knocked down (CKD) kits, which will in turn be assembled by Hindustan Motors into fully built cars. The CKD assembly operations through the contract manufacturing route are aimed at giving Isuzu a footprint in the Indian car market by allowing the car maker to begin operations even before its own manufacturing facility gets up to steam.

Also, CKD assembly could mean cost efficiencies for Isuzu. However, it remains unclear as to whether Isuzu will drop prices of its products assembled through the CKD route.  Isuzu choosing Hindustan Motors for CKD assembly of the D-Max and MU-7 could have to do with the fact that Chennai, a major port city on India's east coast, makes for convenient logistics as the CKD kits arrive from Thailand. This strategy is also evident in the location of Isuzu's upcoming factory at Sri City.

Currently, Isuzu's two model range is sold through two dealerships at Hyderabad and Coimbatore. The Isuzus currently sold in India are imported as completely built units (CBU). Isuzu plans to take the dealership count to 10 by the end of 2013. The next Isuzu dealership will be situated at Chennai. Isuzu is actively seeking entrepreneurs to establish dealerships in different cities of the country. Here's a link to the Isuzu India Website.