Hyundai’s India low cost micro-car in 4 years

Hyundai has announced that it plans to build an ultra cheap mini car for India, which would likely be launched by 2011. The proposed small car is expected to positioned against the Tata Nano.

Currently, Hyundai’s cheapest car in the Indian market is the Hyundai Santro. The mini car would be priced substantially cheaper than the Santro when it is launched to keep it price-competitive against the Nano. However, at such a low price, it is expected that the Hyundai small car would not be sold in its home market, South Korea and would be exclusively for India and other developing countries.

Hyundai is quadrupling its R&D head count for the small car project to 800 engineers from the current 200. The new car is under joint development at R&D centres in Hyderabad and Namyam in Korea. An annual demand for around two million units of this car is expected by the time the product actually rolls of the assembly line and makes it to the market. Hyundai is well on track to making India its small car manufacturing hub.

Before the debut of the Tata Nano at the Auto Expo in January 2008, Hyundai had been skeptical of the idea of an ultra low cost car, and had expressed their doubts as to whether it would be practical. However, like many other car manufacturers, the reception to the Tata Nano India as well as several developing countries has convinced them that it would indeed be wise to target the ultra cheap car market. However, market conditions in 2011 would be difficult to predict at this point.

The next four years will see Hyundai proceed on the low-cost car plan with the target launch being in 2011. The need for a such a small car has in fact become a must for Hyundai as it is expected to help Hyundai defend the lower end of its market. The small car would mean that Hyundai too has joined the small low cost car manufacturing spree which has been kicked off by majors such as General Motors, Toyota, Renault-Bajaj, Fiat and Volkswagen, apart from pioneers Tata Motors.