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Hyundai Motor agrees to acquire General Motors Plant in India

2024-03-03 Update From: AutoBeta autobeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)08/17 Report--

On Aug. 16, according to media reports, South Korean carmaker Hyundai Motors reached an agreement with US auto giant General Motors to acquire GM plants in India.

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It is understood that Hyundai Motor has signed an agreement to acquire GM's plant in Pune, Maharashtra, India, through its wholly-owned subsidiary Hyundai Motor India Co., Ltd. The agreement signed includes the acquisition and transfer of the factory's land and buildings, as well as some machinery and manufacturing equipment, but Hyundai did not mention the price of the deal. Hyundai pointed out that Hyundai will complete the acquisition process within this year after obtaining approval from the Indian government and meeting other acquisition requirements. In addition, Hyundai plans to upgrade the existing infrastructure at GM's Talegaon plant in India and start production in 2025, which currently has an annual capacity of 130000 vehicles.

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GM has been out of the Indian market for a long time. GM has stopped selling cars in the Indian market since 2017, so the factory is idle, and in order for the factory to sell at a good price, GM has also had to invest a lot of money to maintain plant equipment and machinery, according to a previous report by Automotive Industry concern. At the end of 2017, GM sold one of its car plants, Harrol, Gujarat, to SAIC, which then produced and sold its MG in India. In January 2020, GM sold another car plant, the Talegang Plant in India, to Great Wall Motor, which was scheduled to be completed in the second half of 2020, but failed because it was unable to obtain approval from the local government and relevant regulators.

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With Great Wall unable to take over the plant, GM will continue to spend money on maintaining the plant's machinery and looking for a new buyer. If the agreement between Hyundai and GM is approved, it may mean that GM will be able to withdraw from the Indian market completely, and Hyundai will further expand its influence in the Indian market.

It is important to note that the Indian market is more complex than other countries. In 2020, the Indian government changed its foreign direct investment policy, requiring that investment in India from countries bordering India must be approved by the government. This policy has also disrupted some car companies planning to enter the Indian market. In other words, Hyundai's acquisition of GM's Indian plant also needs to be approved by the Indian government.

Last year, India overtook Japan for the first time to become the world's third-largest car market after China and the United States. Car sales in India were 4.7255 million in 2022, up 25.7 per cent from a year earlier, according to the Association of Indian Automobile Manufacturers. Statistics at the beginning of the year show that India has a population of 1.4 billion, and the super population has also brought new development opportunities for new car sales in the Indian market. Industry people say that although electric vehicles accounted for less than 2% of total car sales last year, India's new energy market has great potential, and the local government has determined that electric car sales will account for 30% of total sales by 2030. But India does not yet have a car company that can actually produce power batteries, which makes executives of many car brands eager to gain a first-mover advantage, which may be why Hyundai decided to buy GM's Indian plant.

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Hyundai, India's second-largest carmaker, sold 552500 vehicles in 2022, accounting for 14.5 per cent of the total market share, according to data. As of last month, Hyundai had sold 346700 vehicles in India this year, keeping it in second place with a 14.6 per cent share.

After the acquisition of GM's Indian plant, Hyundai will have two plants in India and plans to increase annual production capacity. "as Hyundai Motor India Co., Ltd. has increased its production capacity from 750000 to 820000 vehicles in the first half of this year, the expansion of GM's India plant will lay the foundation for Hyundai Motor India Co., Ltd. to produce about 1 million vehicles a year," Hyundai said. " Hyundai is planning to invest $2.45 billion to increase production of electric cars in India. A few days ago, Hyundai said it would launch more Hyundai and Kia-branded electric vehicles in India. Hyundai is scheduled to launch five new electric vehicles in India by 2032. Kia will start producing small electric vehicles optimized for the Indian market in 2025, followed by a variety of electric and special-purpose vehicles.

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