Hyundai will shift i20 production; plans local diesel engine plant

Hyundai Motor India, the largest exporter of cars in India is making some smart moves.

The company has chosen to move production of i20 to Turkey or Czech Republic which will supply to countries other than India. As a result, the logistics cost and import taxes are slashed leading to the reduction of its price by 10 to 15%.

This is done to face the competitive pricing of the compact cars in Europe, according to Hyundai. Hyundai however did not mention the recent worker strike at the plant that bogged down volumes as a reason, which we think was the driving force behind this decision.

On the other hand Hyundai Motor plans to set up a diesel plant near Chennai which will be operational by the end of next year.

The official said the diesel engines were imported till now but with the help of the new plant the diesel engines will be produced in India itself for the diesel models the i20 and the Verna. This plant will have the initial capacity of 50,000 engines.

There is no clue what is the investment going into the new plant but the cost of importing an engine is almost 25% of the cars cost. So it is obviously a good idea to set up a diesel plant in India as the demand for diesel cars is going to increase in the years to come.

Hyundai i20 3-door Images

Source - Hindu Business Line