Hyundai pitches India as a hub to its vendors

Hyundai Motor Co., India’s second-largest carmaker, has asked its vendors, including tyre maker Continental AG and Aptiv Plc, to boost production in the country to cut its dependence on China for manufacturing.

“Now we find many foreign players starting (manufacturing) in India. For example, with Continental, we are working very closely. They will supply to us in a big way,” Ganesh Mani S., director of production at Hyundai Motor’s India unit, said in an interview.

“Be it Bosch, Continental and some of our Korean vendors—these companies will not only be our partner in Korea or India, but they will also be working closely with us in multiple ways,” he said.

Hyundai Motor is seeking to develop India as a global sourcing hub for vehicle parts as part of a broader effort to reduce its over-reliance on China. Korean firms such as Hyundai and Samsung are scaling back production in China amid trade tensions with the US and relocating their factories in markets such as India and Vietnam.

Hyundai has also boosted efforts to work closely with its foreign suppliers in India following disruptions in vehicle production after the coronavirus outbreak in China. The company plans to grow sourcing of auto parts from India for its plants in Asean, including the one coming up in Indonesia. Hyundai also intends to procure parts from India for its factories in South America and Eastern Europe.

“Unlike Maruti Suzuki, Hyundai continued with its Korean vendors like Mando for steering systems despite availability of high-quality Indian vendors like JTEKT India in the same space. However, Covid has posed an unusual supply chain challenge to such OEMs, which is leading them to look back and localize the vendor base,” said Md Shaqat Ali, senior research analyst, Asian Market Securities.

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