Monday, March 20, 2023

Hyundai Motor India invests over Rs 3,500 crore in FY20


Hyundai Motor India, India’s second largest carmaker in terms of sales volume has invested Rs 4,589 crore in the country during FY20. The investment was part of the Rs 7,000 crore investment committed by Hyundai Motor India to the Tamil Nadu government announced in 2019.

Also, despite an 8% drop in its output in the FY20, Hyundai Motor India managed to hold on to its turnover of almost Rs 44,000 crore. This was driven by the conscious shift towards higher priced premium cars.

With the models like new Creta and Venue, Hyundai India outperformed the overall Indian market, grabbing market share by 130 basis points at a time, when the domestic auto market registered its worst yearly decline in a decade, hit by a double whammy of economic crisis and Coronavirus pandemic. Thanks to the new models, Hyundai Motor India was able to close FY20 with 17.5% market share.

During FY20, Hyundai Motor India launched five new models in a bid to stay ahead of the rival automakers. The momentum was further accelerated in FY21 with the introduction of all new Creta, Verna, i20 amongst others.

Hyundai i20 Hyundai Motor India

According to financial data, Hyundai India registered a 9% drop in net profit at Rs 2,390.60 crore in FY20. The net profit was pulled down by higher marketing costs incurred for the launch of five new cars and also due to the transition of its entire portfolio to BS-VI emission norms from BS-IV in order to comply with the stringent emission regulation.

Despite Hyundai Motor India’s operating margin slipping to around 10%, the automaker’s strategy to upgrade its India portfolio has worked positively. With the new launches and the upgraded models, the average price point for Hyundai Motor India has moved up from Rs 5.5 lakh to Rs 8 lakh, which is visible in the operating margin of the South Korean auto major. Over the last 3-4 years, Hyundai Motor India’s EBITDA moved into double digits from 6%-7% prior to FY16.

Hyundai Motor India’s plants utilised their 90%-95% capacity in FY20, even when the overall industry’s plant capacity utilisation dropped to 50%-60%. Also, while the overall market remained in the red zone, HMIL worked to expand the capacity further.

The automaker took steps to increase the production capacity to 7.5 lakh units per annum using the automation in the manufacturing process. Also, through a series of cost cutting measures, Hyundai Motor India was able to save Rs 90 crore in costs in FY20. Now, the company aims to increase the annual production capacity to 8 lakh units.

HMIL rolled out 6.47 lakh units in FY20, as compared to 7.1 lakh units produced in the previous fiscal, registering a decline of 8.96%. While the domestic sales of the company was hampered in the last financial year, increased export volumes helped in offsetting the sales dip partially. Hyundai Motor India exported 1.62 lakh units in FY20, recording a 4.8% growth.

Also Read: 2020 Hyundai i20 is a complete Industry 4.0 product: All you need to know

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