Hyundai Motor India (HMIL), a wholly-owned subsidiary of South Korea’s Hyundai Motor Company, today announced a 20-25 per cent cut in production, starting December 29. At the same time, the company said it would increase prices across modles by a minimum of 2 per cent in January.
Almost three weeks ago, the company had slashed vehicle prices by up to Rs 44,792 on account of the 4 per cent reduction in the central excise duty.
H S Lheem, managing director of HMIL, said, “We tried to absorb whatever increase was there in various categories but we cannot take it anymore. We are not in a position to avoid the rise and hence we will pass it on to the consumer”.
The firm sells seven models currently in India in the price band of Rs 2.67 lakh-Rs 16.97 lakh (ex-showroom Mumbai).
Other companies who have also declared price hikes in January include Japanese car makers Toyota and Honda. Both companies have stated that high cost of import, thanks to the weakening rupee, has forced the upward revision in prices.
On the output reduction, the company said its plant in Sriperumbudur near Chennai will witness a cut in production shifts from three to two as demand has slackened.
The company will, however, go ahead with the launch of its latest model, i20, which is also scheduled for December 29.
“We are cutting production at Chennai as demand has declined. We do not see any major change in demand until the second half of 2009. Banks have cut rates only marginally but more action is required for demand to pick up,” Lheem said.
However, he did not specify till when the company plan to cut production.
Although HMIL recorded a fall of 23 per cent last month in sales, the company was so far thought to be secluded from the demand slowdown in the domestic market as its models, including i10 and Santro, continued to gather strong response.
The company has also downsized its sales target for the financial year by 7.5 per cent to 490,000 units, including exports, as compared to 530,000 units projected earlier. Company officials refused to give details of sales target for 2009.
“We may not be able to post a significant increase in sales in the first half of next year as demand is expected to remain sluggish but the second should see an upsurge,” said Ashok Jha, president, HMIL.
i20, to be launched on Monday, will be available in diesel and petrol options. It will be a premium hatchback model that will be costlier than the Getz.
