The Talegaon plant in the western state of Maharashtra will be acquired by Hyundai Motor Co.’s Indian subsidiary, enabling General Motors to leave the country and increasing Hyundai’s yearly production.

Hyundai wants to boost its total manufacturing capacity to one million units annually through its Talegaon plant as well as its Sriperumbudur facility outside of Chennai, it announced on Wednesday. 820,000 units may have been produced every year by the corporation in the first half of this year.

The South Korean company stated that it planned to modernise the Talegaon unit’s current infrastructure and begin production in 2025. There are now 130,000 units that can be produced annually at the plant.

Hyundai, the second-largest automaker in India by sales, made no mention of the value of the deal. 

This agreement will enable the American automaker to leave India. After experiencing years of declining sales, GM stopped selling cars in the nation in 2017. However, the company’s ultimate exit from the market has been complicated by legal disputes with employees and the inability to find a buyer for the facility.

In 2019, GM and China’s Great Wall Motor (601633.SS) reached an agreement to sell the facility, but negotiations broke down when neither party was able to get the necessary regulatory permits in the face of New Delhi’s scrutiny of Chinese investments.

In an indication that it is placing a significant wager on the third-largest auto market in the world, Hyundai announced last week that it intends to introduce more electric cars (EVs) under the Hyundai and Kia brands in India.

It anticipates spending $2.45 billion to increase EV production there and is optimistic about the local market’s interest in EVs.

(Adapted from Business-Standard.com)