India's COVID-19 Situation Improves, Hyundai Motor Also Moves to Expand Production

[Asia Economy Reporter Changhwan Lee] As the spread of COVID-19 slows down in India, Hyundai Motor and Kia have started to normalize their factories and sales networks in India. Hyundai and Kia's domestic factories, which had repeatedly shut down due to semiconductor parts shortages, have also resumed weekend overtime schedules after about a month, stepping on the accelerator to expand market share both domestically and internationally.

According to the Society of Indian Automobile Manufacturers (SIAM) and local media on the 22nd, Hyundai will expand the production line at its Chennai plant from the previous two shifts to three shifts starting this week. Kia will also soon start three shifts at its Tapur plant and increase production volume.

Last month, as COVID-19 cases in India surged nationwide, reaching 400,000 daily confirmed cases, Hyundai Motor Group shut down some local production plants and switched to a two-shift work system to reduce production volume.

As a result, production decreased and the dealer network contracted, with total vehicle production in India last month reaching only 806,755 units, a sharp 57% drop from 1,875,698 units in the previous month. Hyundai Motor India Sales also reportedly posted significantly decreased sales performance locally in May compared to the previous month.

However, since the number of daily COVID-19 cases in India dropped to around 50,000 to 100,000 this month, most local automakers, including Hyundai and Kia, have been gradually returning to normal operations. Major local automakers such as Maruti Suzuki, Honda, and Tata have resumed factory operations and are increasing production.

With the resumption of factory production, competition among companies is expected to intensify in the Indian automobile market, which has high growth potential. Notably, Hyundai and Kia reportedly surpassed Maruti Suzuki, which had an unshakable 31.5% market share, to rank first in monthly sales last month with a 35% market share. Hyundai Motor Group is aiming for the top spot in the Indian market by continuously launching new models of popular vehicles such as sport utility vehicles (SUVs).

Production normalization is also gradually taking place domestically. Weekend overtime at major plants such as Ulsan, which had been suspended due to the shortage of automotive semiconductors, has begun to resume. The so-called "gun pitch," where conveyor belts run without vehicles to assemble in some plants, is also coming to an end.

Hyundai Motor Group's production normalization is expected to accelerate from next month. Kia recently stated in a conference call with major domestic institutional investors that the shortage of automotive semiconductors will ease starting next month.