In a bid to tone down its import bill, Hyundai Motor India Limited plans to start the production of its high end cars in India. As a result, the company will start manufacturing Santa Fe, a Sports Utility Vehicle (SUV), and Sonata, a sedan, locally. With this move, the company will be successful in saving considerably on import taxes that are levied on Completely Built Units (CBUs) and also insulate itself from the depreciating value of the Indian Rupee against the Korean Won.
Till now, the second largest car maker of India had been manufacturing its small cars at the plant in Sriperumbudur, Tamil Nadu, while the high end cars were directly imported from South Korea or assembled with completely knocked-down kits.
According to Arvind Saxena, Director (Marketing and Sales), Hyundai Motor India, the company had commenced the local production of Santa Fe since August 2011 itself and aims to continue in the same direction regarding its luxury vehicles in coming times too.
Despite manufacturing the car in India, the company still needs to procure some parts of the car from South Korea. This has resulted in an inflated import bill for the manufacturer, as the Won has been steadily appreciating against the Rupee.
For CBUs, the company ends up paying 60 per cent taxes to the Indian government, while it gives a 10 per cent duty on knocked down vehicles. On the other hand, it shells out 30 per cent import duty for vehicles that are imported in completely knocked-down format or have a pre-assembled engine, gearbox or transmission mechanism.
As per officials, the savings made by the company by producing vehicles locally will be passed on to the buyers, who would soon be able to acquire Hyundai's luxury cars at reduced prices.
