Hyundai to Invest $300 Million on Engine Factory in India

Hyundai Motor Co. (005380), South Korea’s largest carmaker, plans to set up a new engine factory and other manufacturing facilities in India to meet a growing market for diesel vehicles.

The facilities, including a new press shop, will be at the company’s existing manufacturing complex in Sriperumbudur near Chennai in southern India, Hyundai said in a statement.

“This investment will help us meet the growing demand of diesel vehicles in India and reduce the waiting period,” Bo Shin Seo, managing director for Hyundai’s Indian unit, said in the statement. The new plants will provide 500 jobs, he said.

India’s fuel pricing policy makes diesel about 30 percent cheaper than gasoline, spurring demand for vehicles running on the less expensive fuel. Maruti Suzuki India Ltd. (MSIL), Toyota Motor Corp. and Ford Motor Co. have all announced measures to raise production of diesel vehicles to cater to this market.

Maruti, based in New Delhi, has bookings for 125,000 vehicles, with diesel cars accounting for as much as 90 percent of them, Mayank Pareek, head of sales, said last month. Sales of diesel vehicles rose to 72,462 units in the second quarter from 50,920 a year earlier, he said.

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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