The production of Hyundai Motor India Ltd’s popular SUV, the Creta, has been significantly affected due to a fire at the Hyundai Mobis plant in Chennai, which supplies essential components. This incident has led to a reduction in daily output from over 1,000 vehicles to approximately 200.
Hyundai is currently exploring alternative sourcing options and may temporarily rely on imports to address the component shortage. The company anticipates a return to normal production levels within the next two weeks, emphasizing the urgency of maintaining dealer supplies to prevent sales impacts.
Fortunately, dealer inventory remains sufficient to avoid immediate sales disruptions. However, Hyundai is working quickly to resolve the issue before supply constraints begin to affect sales figures, especially as it competes with Mahindra and Tata Motors for market share.
Production Timeline
Hyundai has confirmed that the production disruption is primarily limited to its Chennai Plant 1, which is expected to resume normal operations by mid-June. The company has reassured stakeholders that any production losses will likely be recovered in the upcoming quarter.
The fire occurred on May 31 at the Hyundai Mobis facility, located near Hyundai's manufacturing site in Chennai. This plant plays a crucial role in providing key components such as chassis and cockpit modules.
Market Position and Future Plans
Hyundai has experienced a decline in its market position, ceding the No. 2 spot in the passenger vehicle market for the first time since FY09 due to increased competition. In FY26, the company sold over 578,000 vehicles, with the Creta accounting for a significant portion of those sales.
Despite these challenges, Hyundai plans to introduce at least two new models in FY27 to regain market share and enhance its competitive stance. The company operates three plants in India, with a combined production capacity of approximately 994,000 units annually.
Expert Insights
Industry experts have noted that companies facing critical component shortages often have limited options. They may need to assist their suppliers in recovery or seek alternative arrangements from other facilities if available.
Hyundai's manufacturing operations in India serve as a hub for exports to various emerging markets, making the resolution of this supply issue particularly important.
