Sonata has been highly successful in US, compared to Toyota and Honda and plans to tap the high premium end of the Indian market with a likely price tag of Rs 12 lakh, according to Hyundai Motor India Ltd director (marketing and sales), BVR Subbu. Once the new models arrive, the production capacity will have to be suitably enhanced. Presently, the company has achieved 100 per cent capacity utilisation at its lone plant in Chennai, he added.The proposed $400 million investment will be in various stages. The investments will be utilised for upgrading engine assembly, body building and paint shop of the Hyundai plant.

Presently, Santro is in neck-and-neck race with Maruti Zen for the mid-price segment and in some cities it has succeeded in overtaking Zen, Subbu claimed. So far Hyundai has sold 1,20,000 Santros and 14,000 Accent models. The diesel version of 1.5 litre Accent is also likely to be well received in the country, Subbu said.

Contrary to what many foreign auto majors have been arguing, it is viable to have production facility in India rather than importing the cars. Labour productivity, quality of accessories and other infrastructure services are comparable to international standards. This is true even with the lowering of import tariffs for automobiles in the country, Subbu said.

It is only those foreign firms saddled with excess production capacity in their home countries which have been arguing for direct import of cars. Ultimately those lobbying against local manufacturing are only supporting de-industrialisation rather than industrialisation of the country, he added.