Hyundai’s IPO Move: Banking on India’s Auto Boom to Replace China and Russia
World’s 3rd largest auto market with steep growth trend
Large-scale funding is required to secure a leading position
An additional 1 trillion won for hydrogen and electric vehicle ecosystem
IPO fund will be used to execute investments
Hyundai Motor Company (Hyundai) is planning an initial public offering (IPO) of its Indian subsidiary to meet the surging demand for auto investment in India. The amount Hyundai has announced to invest in the Indian auto market from last year to early this year exceeds 4 trillion won ($3 billion). Hyundai plans to secure a leading position in India, which has emerged as one of the top three auto markets in the world, based on locally raised funds.
India’s growth rate is steep, pushing Japan out in 2022 to become the world’s third-largest auto market after the US and China. According to the Society of Indian Automobile Manufacturers (SIAM), domestic auto sales in India last year were 4.85 million units, a 28.3% increase from 2022. Electric vehicle sales grew by 100% from the previous year to around 876,000 units.
The rapidly growing Indian auto market is a “land of opportunity” for Hyundai. It is a strategic stronghold to replace the sluggish markets in China and Russia.
Indeed, the strong performance of the Indian market was a significant factor behind Hyundai’s highest-ever performance last year. Hyundai sold 605,000 units in India last year, a 9.4% increase from 2022. It was the first time in 27 years since Hyundai entered the Indian market in 1996 that its annual sales exceeded 600,000 units. The difference between Hyundai’s European sales volume (636,000 units) last year was only about 30,000 units. Hyundai is aggressively investing to gain a leading position in the Indian market. The investment amount announced in the past year alone exceeds 4 trillion won ($3 billion), necessitating large-scale fundraising.
Last year, Hyundai announced an investment plan of 3.2 trillion won ($2.4 billion) over ten years to capture the Indian auto market. It decided to convert the existing internal combustion engine production line to an electric vehicle line and establish a new production facility capable of assembling 178,000 electric vehicle batteries annually. Earlier this year, Hyundai also unveiled a plan to invest an additional 1 trillion won ($750 million) to build a hydrogen and electric vehicle ecosystem in India. This fund will establish a Hydrogen Resource Center (HRC) near Tamil Nadu, where the Hyundai Chennai factory is located, and for electric vehicle development.
But that’s not all. Last year, Hyundai invested 1 trillion won ($750 million) to acquire a production plant in the Talegaon region of India from General Motors (GM). The decision was made based on the assessment that the increasing demand for automobiles in India could not be met with just the two factories located in Chennai. Last year, 4.85 million new cars were sold in the Indian market, and it is expected that by 2030, more than 5 million passenger cars alone will be sold. After acquiring the GM factory, Hyundai plans to start production in 2025 and gradually increase production by improving facilities. Through this acquisition, the Hyundai Motor Group secures a production capacity of more than 1.35 million units annually, together with Chennai (Hyundai vehicle 820,000 units) and Anantapur (Kia vehicle 350,000 units).
An industry insider said, “Hyundai will execute the investment planned locally through the IPO of its Indian subsidiary.” He added, “There is a high demand for investment not only domestically but also in the US and Europe, so the direction has been set towards local fundraising in India.”