Hyundai Inks Pact To Acquire General Motors India's Talegaon Factory

Hyundai India has signed a pact with General Motors India for the potential acquisition of the latter’s plant in Talegaon, Maharashtra.

The American company had signed a deal with Great Wall Motors in January 2020 to sell the plant, but the deal fell through last June as the Chinese carmaker did not receive the required approvals from the Indian government in time.

General Motors stopped production at the Talegaon plant in 2020. The plant, established in 2008, has the capacity to produce 1.3 million cars and 1.6 million engines per year.

If Hyundai’s agreement with General Motors is approved, the South Korean automaker could potentially increase its production capacity in India by over two-fold. At present, Hyundai operates two facilities near Chennai, capable of manufacturing approximately 824,000 units annually. These two plants are currently operating at an utilisation rate of around 93 per cent. Hyundai said on Monday: “The term sheet (pact) covers the proposed acquisition of land, buildings and certain machinery and equipment for manufacturing situated at General Motors India, Talegaon Plant.”

The proposed acquisition is subject to the signing of the definitive asset purchase agreement and fulfillment of conditions precedent, receipt of regulatory approvals from relevant government authorities, and all stakeholders related to the acquisition, it added.

Hyundai India is the largest car seller in the country after Maruti Suzuki India, with a market share of 14.9 per cent, compared with Maruti’s 42.3 per cent. In the April-February period of financial year 2022-23 (FY23), Hyundai India sold 516,946 units, a jump of 18.3 per cent compared with the corresponding period of FY22.

Tata Motors, the third-largest player in the Indian automobile market, is the closest rival to Hyundai. However, if Hyundai succeeds in acquiring the Talegaon plant, it will be able to create a significant gap between itself and Tata Motors.

General Motors employees’ union, which represents about 1,000 employees of the Talegaon plant, is currently embroiled in a dispute with the American company to ensure employment with the new owners and wages for the interim period.

According to the direction of the Industrial and Labour Court, Pune, a mediator recently held two rounds of negotiations between the company and the union, but these out-of-court talks did not yield any results. It was unclear whether these employees would be hired by Hyundai at its new plant.

In FY22, Hyundai posted a profit after tax of Rs 2,861 crore, which was a 54 per cent jump year-on-year. Hyundai India plans to introduce six electric vehicles (EVs) by 2028, focusing on technology, sustainability, and innovation for growth, according to its Managing Director and Chief Executive Officer Unsoo Kim, who spoke to Business Standard in January.

“HMIL (Hyundai) was the first company to launch a long-range electric SUV (sport utility vehicle), Kona Electric, in 2019. As we continue to redefine the mobility space, we have announced phase-wise investment of Rs 4,000 crore towards developing six electric vehicles in India by 2028,” he had said.

Kim added that the company’s line-up of six EVs would cater to multiple segments, including the mass-market and mass-premium ones in India.