Hyundai signs agreement to acquire General Motors 's Talegaon plant

Hyundai India has signed an agreement with General Motors India for potentially acquiring the latter's Talegaon plant in Maharashtra.

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

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

Hyundai said on Monday that "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 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. Its market share is 14.9 per cent as compared to Maruti’s 42.3 per cent. In the April-February period of FY23, Hyundai India sold 516,946 units, marking a jump of 18.3 per cent when compared to the corresponding period in FY22.

Tata Motors, ranked as 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 in a dispute with the American company to ensure employment with the new owners and wages for the interim period.

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

In FY22, Hyundai posted a profit after tax of Rs 2,861 crore, which was an increase of 54 per cent 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 said.

Kim added that the company's lineup of six electric vehicles will cater to multiple segments, including mass-market and mass-premium segments in India.