Hyundai Motor, Caparo Group join hands to produce luxury buses in India

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According to the terms of the deal, Hyundai will provide the parts and production technology for Aero buses while Caparo will build a greenfield facility in Chennai that will have a capacity of 1500 units per year. Production would subsequently be raised to 5100 by 2013, Hyundai said in a statement.

The plant, a wholly-owned subsidiary of Caparo India under its division Caparo Vehicle Products India, is scheduled to begin production in early 2009, Sunil Pahilajani, president, Caparo India, said. The facility, to be set on 20 acres of land, is expected to employ about 200 people initially.

Hyundai, which has complete-knock-down (CKD) commercial vehicle plants in China, Vietnam, Russia, Indonesia, Malaysia and Iran, is confident that a similar plant in India will help it surge to the top spot of India's luxury commercial vehicle market which is recording phenomenal growth due to rapid economic development and rising demand for such transportation.

Though the financial details of the deal were not disclosed, yet, Hyundai said it will receive $4 million for technology transfer under the five-year agreement.

"By supporting the Caparo India plant, we are looking at growing our presence in India into the luxury transportation segment," Choi Han-Young, president, and Yong Won-Jang, director, Hyundai Commercial Vehicles, said.

The high-quality Aero buses will be specially engineered to give higher durability and aim for stability, quietness and comfort during high-speed cruising and fuel economy. They will be fitted with powerful and efficient Euro III & IV engines, air-wide suspension and ABS systems.

"Long-distance travelling and demand for luxury buses in tourism are continuing to increase as India builds new highways and as a new middle-class emerges," a Hyundai official said. "Hyundai, with its high-performance and high-quality Aero bus, will create a reverberation in the Indian commercial vehicle market, which has been dominated by local makers such as Tata and Ashok Leyland."

"The buses would be badged Hyundai - Caparo. The branding and marketing strategies are still to be worked out," Dev Mukherjee, CEO, New Projects, Caparo, said, following the signing of the agreement.

Initially, the buses, which would come in three variants fitted with engines ranging from 320 HP to 380 HP, would only be sold in India.

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