A walk through the body shop and the assembly line revealed state-of-the-art facilities that have made the company among the most modern, efficient and profitable car companies in the world. Look at some of these figures:
. The company produces over 600,000 cars a year.
. Of these, a third, over 200,000, are exported with large numbers going to the demanding European countries.
. There is a high degree of automation with hundreds of robots taking care of safe, accurate and speedy welding, ensuring high productivity. The assembly line is a maze of systems that convey parts for assembly to precision.
. Productivity is extremely high with a worker turning out over 150 cars on an average every year!
. Components and sub-assemblies are received from around 140 vendors. These include around 42 Korean companies located around the plant ensuring supplies by the hour. For such large volume of production deliveries are made just in time!
. Advances in automation, high production techniques and management systems are passed on to the vendors.
Hyundai Motors displayed the Santro small car at the Auto Expo, New Delhi in January 1996. At that time Ford India had not decided on its new model.
I remember a dozen Korean executives watching with keen interest the launch of Ford India in January 1996. They were keenly observing every move of Ford that had decided to set up a large scale production unit at Maraimalainagar near Chennai.
Even when Ford announced the release of its first car by October 1998, Hyundai seemed to have made up its mind to race ahead of Ford. How effectively it did this, in just 18 months!
IE interacted with BVR Subbu who took charge of marketing after his stint with Tata Motors. Quite articulate and was ever keen to pass derisive comments on the other Korean manufacturer, Daewoo, that was making large investments at NCR, Delhi. Daewoo’s Matiz was also displayed at the Auto Expo and looked a more attractive design. Subbu predicted that Daewoo would not flourish on promised lines. It proved true. Daewoo crashed and was acquired by General Motors.
Tax benefits that drove the project and the state!
The Koreans rode on the excellent incentives extended to large investments in Tamil Nadu - like allotment of large area of land, assured power supply, liberal tax incentives like the funding of sales tax for 14 years and low sales tax rates (of 1 per cent for components procured from within the state).
The company brought along with it a large number of ancillary units from Korea that took care of quality and timely supplies.
The Santro provided stiff competition to Maruti and emerged as an attractive buy. Over five million Hyundai cars have been sold so far. The range expanded with more models introduced with increased sophistication.
The system that supports zero inventory
Hyundai Motors developed the Tamil Nadu plant as a hub for several of its models for global sales. It emerged as the largest exporter of cars in the country earning annually over Rs 6000 crore in foreign exchange. Hyundai thus established India for its capabilities in producing a highly sophisticated and engineered product like the automobile. From the initial 100,000 cars, Hyundai’s capacity has increased more than six’ fold. Hyundai today employs 8500, has a strong dealer network of over 415 which is fast expanding.
Indirect employment through ancillaries and services runs into several thousands. Chairman of TVS Motors, Venu Srinivasan, described the arrival of Hyundai as a watershed in the industrial development of India. The large number of dedicated suppliers along with the mother plant helped spread state-of-the-art production, management and technology development.