Hyundai Motor Group to invest $15.5 billion in India through 2032

NEW DELHI — Hyundai Motor Group will invest $15.5 billion in India through 2032, Executive Chair Euisun Chung told Indian Prime Minister Narendra Modi, as the Korean automaker bets on the world’s third largest car market.

Chung met Modi in New Delhi on Tuesday, a day before the sixth anniversary of his taking the helm of the group. The meeting was the pair’s eighth.

“We have grown together with India over the past 30 years since entering the country in 1996,” Chung told Modi, according to the group. “India is a strategic country that will drive Hyundai Motor Group’s future growth and its expansion into emerging markets. With the Pune plant in operation, we have secured the capacity to produce 1.4 million vehicles a year.”

Chung said the group would keep pace with the growth of India’s car market and increase exports to other emerging markets.

Hyundai Motor bought a former General Motors plant in Pune, in the western state of Maharashtra, and began mass production there in October last year.

“We are planning to invest about $15.5 billion over seven years starting this year,” Chung said.

The group will build a new plant, expand its research and development (R&D) facilities to recruit Indian talent and work more closely with local parts suppliers. About $700 million is earmarked for its R&D center in India, including a vehicle testing track.

The group will also explore new businesses, including auto financing, EV charging infrastructure and end-of-life vehicle recycling. An electric three-wheeler developed with Indian motorcycle maker TVS Motor Company is slated for commercial launch by the end of 2027. To manage the long-term investments, the group will set up a dedicated investment entity in India.

India is the world’s third-largest car market after China and the United States, and it is still growing fast. Industry sources expect India’s passenger car market to grow about 15 percent this year to 5.25 million vehicles, from 4.57 million last year.

India had 34 passenger cars per 1,000 people in 2022, less than a tenth of the rate in the United States, the European Union or Korea, according to a report the Korea Automotive Technology Institute published in November last year. The United States had 772, the European Union 560 and Korea 455.

India’s population stands at 1.47 billion, and its economy is growing at around 7 percent a year. As incomes rise, many of the motorcycle and three-wheeler riders who fill its streets could switch to cars.

“India’s car market has been growing steadily, and car ownership is still low,” said Cho Cheul, a senior research fellow at the Korea Institute for Industrial Economics and Trade. “As income levels rise, it is highly likely to keep growing quickly.”

India is already one of Hyundai’s most important markets. Hyundai Motor sold 471,724 vehicles there from January to September, second only to the United States and more than the roughly 450,000 it sold in Korea. Kia, which began producing cars in India relatively late, in 2019, sold 253,008 vehicles there over the same period, up 22.5 percent on year.

High barriers for Chinese automakers also work in Hyundai’s favor. India imposes tariffs of 70 to 110 percent on imported cars, depending on price and other factors, and closely screens investment by Chinese companies. China’s BYD shelved a plan to invest about $1 billion in an EV plant in India in 2023 after the Indian government opposed it.

Chinese carmakers cannot easily build local plants to get around the import tariffs, while Hyundai and Kia secured production bases there early.

A JoongAng Ilbo reporter who watched traffic on Kartavya Path in central New Delhi for five minutes on Tuesday counted about 200 vehicles, most of them Maruti Suzuki and Hyundai models. Chinese brands were hard to find, an unusual sight at a time when Chinese EVs are gaining ground around the world.

Local rivals are closing in, however. Hyundai Motor fell from No. 2 to No. 4 in India last year as Tata and Mahindra overtook it, and its market share slipped to 11.8 percent in the first nine months of this year from 13 percent a year earlier.

“The challenge for Hyundai and Kia is how they secure competitiveness in the EV market going forward,” Cho said.

BY SUK GYEONG-MIN [[email protected]]