Other BriefingsHyundai India’s Strategic IPO Entry to Strengthen Position in the Domestic EV Market
In the Indian equities market, there is a great deal of anticipation surrounding Hyundai Motor India’s impending Initial Public Offering (IPO). The company is reportedly going to set up its third manufacturing facility in the country to increase the local production of its battery electric vehicles (BEVs).
Hyundai Motor Company, a South Korean brand, established its first plant in India under the name Hyundai Motor India near Chennai in 1996. Over the years, it has grown to become one of India’s largest passenger vehicle manufacturers, surpassing Maruti Suzuki. Nearly three decades later, Hyundai has filed paperwork with India’s Securities and Exchange Board (SEBI) to launch an initial public offering (IPO).
This IPO is anticipated to be the largest ever in the Indian market, valued at INR 250 billion (US$2.9 billion). Hyundai’s position in the evolving Indian passenger vehicle market is a key selling point for potential investors. Investment banks such as Citi, JP Morgan, HSBC, Morgan Stanley, and India’s Kotak Mahindra Capital Company are advising Hyundai on the IPO entry.
Hyundai India’s IPO listing
If everything proceeds as planned, Hyundai Motor India’s IPO would surpass the record set by Life Insurance Corporation of India (LIC) in 2022, making it the largest IPO in India’s corporate history. The company plans to dilute approximately 17.5 percent of its ownership, offering up to 142,194,700 equity shares, each with a face value of INR 10. The IPO will also include an offer for sale from current shareholders, with no new share offerings planned. The exact timing is yet to be decided, pending SEBI approval.
This move represents the first major IPO by an Indian automaker since Maruti Udyog’s listing in 2003. Other publicly listed automakers in India are Tata Motors (IPO in 1980) and Mahindra & Mahindra (IPO in 1996).
Hyundai’s operations in India
Hyundai manufactures and sells a range of four-wheeler passenger vehicles (PVs) both in India and internationally, including components such as engines and transmissions. The current lineup includes 13 PV models, ranging from battery electric vehicles (EVs) to hatchbacks, SUVs, and sedans. Popular models include the Grand i10 Nios, i20, i20 N Line, Aura, Verna, Exter, Venue, Venue N Line, Creta, Creta N Line, Alcazar, Tucson, and Ioniq 5.
Hyundai Motor Company was established in 1967 and was initially a part of the broader Hyundai Conglomerate, which was started by Chung Ju-Yung in 1947. Working with Ford Motor Company, it debuted the Cortina as its first model in 1968.
The first mass-produced automobile in South Korea was an original Hyundai design that was created in 1975. This signalled the start of Hyundai’s transformation into a global automotive powerhouse. The company entered the North American markets in the late 1970s and early 1980s, in addition to a number of European markets.
Since 1998, Hyundai has sold around 12 million passenger vehicles in India and through exports. As of March 31 this year, Hyundai was India’s largest exporter of passenger cars from FY 2004–05 to the first eleven months of FY 2023–24, according to CRISIL. Data from the Society of Indian Automobile Manufacturers (SIAM) shows that Hyundai sold 614,717 PVs in India in FY24, marking an 8.3 percent year-over-year increase in sales.
Performance in the Indian market
India’s domestic PV market is highly concentrated, with a few key players dominating. Maruti Suzuki leads in domestic sales volume, followed by Tata Motors, Mahindra & Mahindra, and Hyundai, which together control about 80 percent of the market. However, the market has become more competitive over the past five years with feature-rich PV launches by both established companies and new entrants. Hyundai faces competition from Maruti Suzuki India, Kia Motors, Volkswagen, Nissan Motor, and Honda Cars India in the export market.
In 2023, it was reported that Hyundai India has acquired General Motors’ (GM) Talegaon, Maharashtra facility. Two of the company’s current manufacturing locations are in Irungattukottai and Sriperumbudur, close to Chennai in Tamil Nadu.
As of December 31, 2023, Hyundai Motor India had invested INR 297.41 billion (US$3.5 billion) in tangible fixed assets and capital work in progress. The company serves as a production and export hub for developing countries, especially for models like the Venue and Verna. Hyundai plans to accelerate growth by increasing annual production to one million vehicles by 2025, focusing on affordable EVs.
Spotlight: Hyundai’s investments in technology and artificial intelligence (AI) at its Tamil Nadu unit
Hyundai’s investment in technology, automation, and AI at its Sriperumbudur plant near Chennai (Tamil Nadu) represents a significant shift towards advanced manufacturing. The plant, located in an industrial hub hosting major global players, such as iPhone maker Foxconn, Samsung, Royal Enfield, Dell, Mitsubishi, and Nissan, among others, is set to receive a massive INR 260 billion (US$3.11 billion) investment injection as Hyundai celebrates its 26th year in the market. Embracing Industry 4.0, Hyundai’s Sriperumbudur plant integrates AI, machine learning (ML), and virtual reality (VR) across its auto production operations.
Key advancements include a digital transformation starting in 2019, which integrated seven shops by linking over 2,000 critical equipment with 1,000 sensors to manage downtime and predict equipment abnormalities, thereby reducing maintenance downtime by 5 percent.
AI and ML have been leveraged to process 12 billion data points annually, aiding in predictive maintenance and data-driven decision-making. Automation is pervasive, with AI-driven systems enhancing quality control in assembly, body, press shops, and engine manufacturing, ensuring precision and consistency.
The plant also emphasizes employee training through VR, optimizing logistics with mobile robots, and deploying AI for safety and supply chain efficiency. Future plans include generative AI, digital twins, and enhanced sustainability with renewable energy targets.
State policymakers also encourage collaborations with entities like the World Economic Forum, which aim to establish Tamil Nadu as a hub for advanced manufacturing and sustainability practices and is aligned with Hyundai’s own long-term commitment to technological leadership in automotive manufacturing.
EV production expansion in India
Hyundai views India as a key growth market, having invested US$5.04 billion in its two production facilities. Over the next decade, the company plans to invest an additional US$4 billion. The Indian market is the third-largest revenue source for Hyundai globally, after the US and China.
As it aims to improve its position in the electric vehicle market and expand EV charging infrastructure, Hyundai plans to “premiumize” its offerings by selling more expensive vehicles. Hyundai is reportedly also planning to invest INR 7 billion (US$83.9 million) in India to assemble battery packs for battery electric vehicles (BEVs) to be produced locally. The company aims to complete the first phase of construction of its plant in Chennai by 2025, with an initial capacity to produce 75,000 battery packs per year.
One may note that EVs have three different categories, i.e., the plug-in hybrid (PHEV), the hybrid electric vehicle (HEV), and the regular EV, commonly referred to as a battery-powered electric vehicle (BEV).
The move to increase local production is anticipated to help lower the cost of its BEVs in India and boost local demand. The company aims to increase its share of the Indian BEV market from 2 percent to 22 percent by 2030 as part of its global expansion plans.
Earlier this year, Hyundai announced its goal to sell 2 million BEVs annually worldwide by 2030, supported by the launch of 17 new models, including 11 Hyundai and six Genesis models.
BEV demand in India is growing rapidly, albeit from a low base. According to the data provided by the Society of Manufacturers of Electric Vehicles (SMEV), a grand total of 90,432 electric four-wheelers were sold in India in FY24. In FY 2022–23, the sale of EV four-wheelers was recorded at 47,499 units.
Conclusion
The anticipation surrounding Hyundai Motor India’s upcoming IPO highlights the company’s strategic efforts to strengthen its presence in the Indian market. With plans to establish its third manufacturing facility to boost local BEV production, Hyundai aims to significantly increase its market share in both ICE and EV segment. As the company continues to invest in infrastructure and expand its product lineup, industry watchers believe that the company is well-positioned to capitalize on the rapidly growing demand for electric vehicles in India.
(US$1 = INR 83.36)
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