Hyundai to Begin Domestic Assembly of Santa Fe SUV

The second biggest domestic auto manufacturer in India, Hyundai Motors will soon begin assembling their SUV Santa Fe in the Indian auto market. They will also begin taking bookings from June. According to some sources, Santa Fe is presently undergoing duties of homologation at the Pune based Automotive Research Association of India, owned by the government.

The company intends to assemble the SUV locally from CKD units, and is thus performing some structural stress tests on a few of their body shells at their facility. These tests are generally carried out some months prior to the commencement of local assembling.

Hyundai Motor India’s director of sales and marketing, Arvind Saxena, said that beginning CKD operations for Santa Fe were part of their plan. They would typically wait till the volumes reach around 150 units, as it makes sense economically. Currently they are producing around a 100 units per month.

While the SUV is currently imported as a CBU, domestic assembly will aid the company to price the SUV Santa Fe competitively, compared to the competition. The Fortuner for example is priced at Rs.20.1 lakh according to ex-showroom Delhi, while the Ford Endeavour has a price ranging from Rs.17 to 20 lakhs.

The Hyundai Santa Fe is currently expensive, priced at around Rs.21 to 23 lakhs, mostly due to the 60% high import duty allotted to CBUs, while CKDs attract an import duty of only 10%.

The Santa Fe, which will be the company’s only SUV offering in India, popular in US markets, is likely to bring in sales of 600 units from its October launch in 2010 to June, 2011. While the company discontinued orders after they reached their initial target, they plan on commencing fresh orders after June for their second batch of 600 to 800 units.

Saxena also said that they are looking to service the next lot of SUV bookings within the next 6 to 8 months. They have set a target of selling around 1,400 units of the SUV by a year.

Hyundai is currently building their first ever diesel engine facility in India, following the increasing popularity of their diesel vehicles, and are aiming to have a growth of 10 to 12% for 2011. They hope to sell around 4 lakh units in India this year, and export around 2.25 lakh models.

Saxena said that at their Chennai plant, they have a production capacity of 6.6 lakh units per year, and can also increase a bit by balancing their assembly lines. They are not currently in dire need of increasing their capacity, however if do feel the need, than their domestic market will be given priority over the exports market.

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