NEW DELHI: Are escalating manufacturing costs and uncertain labour relations taking a toll on Hyundai, which is the biggest car exporter from India and accounts for nearly 45% of total shipments, will stop the sale of India-made i10 and the newly-launched Elite i20 to the European countries, a move that will have an immediate impact on the company's exports this year.
The company, which exported 2.5 lakh units from India last year, expects this year's shipments at 1.9 lakh units, a decline of 24%. Rakesh Srivastava, senior VP (sales & marketing), said the lower overseas shipments will help free production capacity for the domestic market, which is crucial as the company is launching newer models.
"We have already launched four new models over the last one year, and more are coming. While India still remains a strong export base, the first priority is the domestic market." However,
Company officials admitted that sourcing the models from Turkey and the Czech Republic is more cost-efficient than exporting from India. Higher wage bills and logistics have increased manufacturing costs in India, prompting many companies to have a re-look at the global sourcing plans. Hyundai has long been seeking a rail link from its factory near Chennai to the port, but not much headway has been made here.
Labour relations have also not been very comfortable. While things have been quite on this front for sometime now, the company's plant has seen major tensions in the past, which had also disrupted production. The volatile history may have also prompted the company to opt for other locations as the European markets are among the key export regions and Hyundai would like to avoid any reasons that may lead to delays. Srivastava said Hyundai is focusing on markets like