Hyundai to raise capacity despite shrinking exports

Hyundai Motors India Ltd, the Indian unit of Korea's Hyundai Motor Co, expects exports in 2010 to shrink about 8 per cent, hurt by the withdrawal of incentive schemes in Europe.

But at the same time, it still plans to raise production at its two plants in Sriperumbudur, Tamil Nadu to meet robust local demand.

Hyundai expects exports to decline to 250,000 units from 271,000 units in 2009, its India managing director H W Park told reporters in New Delhi. "Due to the scrappage schemes last year, demand was very high in Europe. This demand is now coming down as there are no fresh incentives," Park said.

Until last year, European nations were offering cash-back schemes to promote the sale of fuel-efficient cars. Indian auto makers Maruti Suzuki India Ltd and Hyundai Motor India were the immediate beneficiaries of such schemes, owing to their fuel-efficient small cars.

Hyundai joins larger rival Maruti in expecting shrinking demand in Europe. Maruti said yesterday that it expects exports to Europe to decline by 20 per cent in the current fiscal year that started 1 April in the absence of any new foreign incentives.

Hyundai, however, plans to raise capacity at its factories near Chennai by 12 per cent this year as demand for new cars in Asia's third-largest automobile market by sales continues to remain robust, Park said.