In 1996, Hyundai decided to set up its base near Chennai to take advantage of liberal incentives extended by the then state government. Things happened at a break-neck speed in an untested market which was still finding its feet.
Massive Tamil Nadu Investment
A memorandum of understanding was signed with the Tamil Nadu government on 18 July 1996. In the first phase, an investment of over Rs 2000 crore was planned for a capacity of 120,000 cars, with a proposed additional investment of Rs 1752 crore to expand capacity to 200,000 cars per annum, taking total investments to nearly Rs 4000 crore. It was a major foreign investment in the sector and the biggest investment by a manufacturing unit in Tamil Nadu. On 6 May 1996, Hyundai Motor India Ltd. was incorporated and the ground-breaking ceremony for its first manufacturing plant at Irrungattukottai (Sriperumbudur) near Chennai was held on 10 December 1996.
Marching ahead
The first car was rolled out on 27 May 1998 in just around 17 months. This came through because Korean expatriates worked long hours. A 1996 report in Industrial Economist pointed out that Hyundai dared to be different. Unlike other auto majors who had entered India through joint venture partners, Hyundai opted to set up a 100 per cent subsidiary. This decision helped the company to forge ahead with its investments on its own and take decisions quickly to align with the changing needs.
In an interview with the magazine at that time, Jong D Bae, Director, Hyundai Motor India, pointed out that the company did not find a good partner when it decided to enter the market. “Automotive plants are capital-intensive. Profits cannot be expected in the short-term. Therefore, we plan to forge ahead by ourselves during this difficult phase, taking decisions quickly and pushing ahead aggressively. When a reasonably solid foundation has been set, we plan to bring in a much higher degree of Indian involvement,” he had said.
Hyundai changed the face of Tamil Nadu and helped to transform Sriperumbudur region into the fastest-growing industrial cluster by building a supplier ecosystem.
The small car magic
The iconic small car Santro was launched with a ‘tall boy’ design and the company roped in bollywood superstar Shahrukh Khan as brand ambassador. The car was on display at Auto Expo in January 1998 and on the second day of the expo, organisers had told the company to deploy more security personal to tackle the surging crowds at its stall. Hyundai went on to sell over 13 lakh units of Santro.
Expanding Domestic Sales
So far, Hyundai has sold nearly 10 million passenger vehicles in the domestic market. Not only that, it has made India a key export hub, with more than one in five vehicles built in India going to a customer in another country. It has exported 4 million passenger vehicles from India since 1999. The company’s Chennai and Pune plants are set to account for a total capacity of 1.14 million units annually by 2030 with close to USD 4.6 billion invested in India.
Landmark IPOs
Hyundai Motor India was listed on the Indian stock market in a landmark initial public offering in 2024, one of the biggest in India’s history. Clearly, Hyundai has succeeded where others have failed. The key to its success is thinking local and acting global. “India is a fascinating diverse market. It becomes imperative that you just don’t bring a global model into India and pray for its success,” said TarunGarg, Managing Director & CEO – Hyundai Motor India Ltd. Garg officially assumed charge on 1 January this year and is the first Indian national to be at the helm since its inception.
It appears that the Koreans have read the Indian market well. Not surprisingly, other Korean brands such as LG Electronics and Samsung, too, are doing well in India. Significantly enough, by listing their Indian subsidiaries, Korean firms such as Hyundai and LG Electronics have chosen to subject themselves to greater regulatory scrutiny. That indeed gives a clue or two to their confidence and long-term commitment to the Indian market.