Hyundai India car exports to decline by 25%

Various constraints in labor relations coupled with escalating manufacturing costs at the Hyundai plant in Chennai has caused the company to stop all car exports to Europe.

hyundai india stalls car exports to europeHyundai, which is the country’s largest car exporter, accounting for 45% of total shipments has immediately stopped exports of the i10 and i20 (old) to Europe.

Last year, Hyundai exports totalled 2.5 lakh units while this year’s exports are down to 1.9 lakhs resulting in a 24% decline. The Korean automaker has discontinued small car exports from the country and, will instead, rely on factories in Turkey and the Czech Republic to step in and fill the gap.

Following this immediate decision taken to stop exports to European countries, Hyundai Motors will continue with exports to countries in Latin America, Middle East, Australia and Asia besides the domestic market. Even then, the company is expected to see a decline of 25% in exports this year.

Europe has been a major market for Hyundai Motors which is also the largest exporter of cars in India. The company’s Chennai plant has the capacity of 6.8 lakh units annually out of which 40% is exported. With four new launches this year, Hyundai Motors plans to augment capacities at their Chennai plant while the Elite i20 which was recently launched being simultaneously produced in Turkey to take care of sales across Europe.

Higher wages and increased logistics have had an adverse effect on manufacturing costs while the company has also sought a rail link from Chennai plant to the port which has also not seen the light of day.These constraints coupled with strained labour relations have also taken its toll on plant performance disrupting production which has also prompted the company to move exports to other locations.

via ET Auto