South Asia

May 9, 2006

Hyundai plans compact car for India

NEW DELHI - In a bid to take on car market leader Maruti, India's second-largest carmaker, Hyundai Motor, plans to introduce a compact car which could be powered by a 1.2 liter diesel engine.

The new car would enjoy the benefit of the excise duty cut announced in this year's budget. "We are developing a new version of a compact car as we need more models in the category," Hyundai Motor India Ltd managing director H S Lheem said.

Dispelling talks about the new car being a replacement for Santro, he said, "This will be a car in the same segment of Santro but this

will not be a replacement of our flagship brand. Santro will continue to be in the market."

"I think, we can have more than one car in the compact car category as the volume of the segment is huge," he said. He did not disclose the specifications of the compact car, however, he said the company was working on a 1.2 liter diesel engine.

"We are currently doing a feasibility study. The company is testing the engine in the country with regard to cost competitiveness as localization is important [for the volumes segment]," he said.

Meanwhile, Hyundai will set up a second engine and transmission plant in Chennai in two years' time, which could entail an investment of about US$600 million. It will also hire 800 people for its R&D to be located at Hyderabad.

Hyundai Motor India said the plan fitted with the firm's vision to make India an export hub for compact cars. The company is in the process of increasing production, which will touch overall capacity of 600,000 cars once the second assembly units go on stream by 2007.

(Asia Pulse/PTI)

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