Hyundai, Korea based car manufacturer, is now reconsidering its plans to build a diesel powertrain production plant in the country, following an interesting turn of events. The company went back on its proposal to invest Rs. 400 crores for the said project following its ongoing feasibility study. Under its then Head, Han Woo Park, the Rs. 400 crores announcement was made in 2010 by Hyundai Motor India Limited (HMIL), which is a completely owned sub-division of Korean company.
Due to the regress faced by the auto market, the company decided to stall the project in November, 2011. It was in the month of March 2012 that the company altered its plans with a new feasibility study after the changes in the top management. Park went back to Korea after being appointed as the Chief Financial Officer (CFO) at Kia Motors which is an extension to Hyundai Motor Company. He was succeeded by Bo Shin Seo as the Managing Director of HMIL. "Our feasibility study is going on. After that, we will decide whether we will go ahead with the plant or not," according to a company spokesperson.
Consistency in diesel prices and hike in that of petrol, announced in the budget, boosted the demand for diesel cars in India. In light of these developments, it was anticipated that HMIL will establish a new diesel plant. According to an insider, company's decision to stall the diesel plant in wake of the present situation is totally out of the box. He said, "The plant was earlier announced in 2010 after completing all the due processes and with all the necessary precautions. However, with the new MD and some new senior officials coming in, the company has started again the feasibility study."
In November, 2011, when the company declared its intention of reconsidering the plan, it said that at least for the 'Medium Term', HMIL will not construct the diesel plant. The proposed plant was expected to have a yearly production capacity of 1.5 lac units, including 1.1 litre, 1.4 litre and 1.6 litre powertrain units. The diesel engine manufacturing plant was announced in December 2010 by then MD, Park. However the company has now put the project under the radar after reviewing the annual budget announced in March.
According to a HMIL spokesperson, “We have to weigh the pros and cons as there has been no mention of diesel tax in the Budget. Within two weeks we will be taking a decision on whether we should go ahead with our diesel plant or not.” As of now, to supplement its existing annual capacity of 6.7 lacs vehicle, the company imports the diesel powertrains from its native country for models like i20 and Verna.
