Hyundai Once Again Puts Diesel Engine Plant On Hold

The dilemma continues for the Hyundai Motors India, as the Government is yet to take a firm decision on excise duty hike on diesel vehicles. The plans for setting up of a diesel engine plant in India looks like a far-fetched dream for the Hyundai’s India unit. Ever since 2009, the company has been not able to present a feasible plan to its parent in Korea. Plans were made and scrapped due to various reasons and the fresh reason being the ‘lack of clarity on Government’s fuel pricing policy’. Thus, the decision to set up plant has again been put on hold.

“We have no decision on the diesel plant from the head office and continue to watch the government policy closely. To meet the high demand, we have increased the supply from Korea and can continue to do so further.” Mr. Bo Shin Seo, MD, Hyundai Motor India, said.

What comes as a surprise is that the decision has been taken at a time when most of its rivals are making investments in the diesel segment. For instance, Maruti Suzuki is investing Rs. 1700 crore to double its diesel engine plant capacity. These moves were taken post the fuel price hike which resulted in customers switching their preferences to diesel vehicles. But, Hyundai’s stance seems to be totally dependent on the moves by the Government.

Hyundai, however, has decided to continue to import the diesel engines from South Korea as they need to meet the rising demand for the diesel units. Import of these engines is definitely a costly affair for the company but those costs are offset by the earnings from the exports as the company exports almost 40-50 percent of its total production. Currently, engines are being imported for the diesel i20 and Verna. But, what comes as a bad news is that introduction of diesel variants of i10 and Eon is not even under consideration.

Source – Business Line