Hyundai Motor India and General Motors are set to sign a definitive agreement next week for the latter’s plant at Talegaon near Pune, five months after the Korean car maker signed a term sheet with GM to acquire the facility.
The acquisition, which is expected to be completed before the end of 2023, will not just help Hyundai tide over capacity constraints in the short to medium term, but will also ensure a manufacturing presence in western India for the company, enabling it to speed up vehicle deliveries.
“With the government of Maharashtra agreeing to GM’s petition for the plant’s closure, the road is clear for Hyundai for a smooth takeover. The physical handover of the plant is expected to be complete before year-end,” said an industry source.
A few weeks ago, the Maharashtra government agreed to General Motors’ petition seeking closure of the plant, crucially allowing the carmaker to move for a legal separation of itself with its employees. GM had secured a similar approval for the closure of its Halol-based Gujarat plant before mid-2017, paving the way for the facility’s takeover by MG Motor India.
Despite the term sheet in March, the Hyundai-GM deal has moved at a snail’s pace because of the unresolved issue of the plant’s former workers. More than 1,000 agitating workers had demanded that they be absorbed by Hyundai. GM said it had offered them “generous” severance packages.
Senior officials of General Motors and Hyundai met Maharashtra deputy chief minister Devendra Fadnavis soon after the term sheet was signed through a Delhi-based consulting firm.
“We currently have no new updates to share. As and when there is a significant update, the same will be shared,” a Hyundai India spokesperson said.
GM said the two companies have signed a term sheet to “support the sale of GM’s Talegaon manufacturing facility to Hyundai”. “Both companies continue to work to secure relevant government and regulatory approvals to support the transaction,” a spokesperson for GM said.
On Wednesday, the former workers of the GM plant marched to the Zila Adhikari office (collector-cum-district magistrate office) in Pune in protest.
“Revoke the decision allowing closure of General Motors Pune plant and pay full salary to all workers. Sack labour minister Suresh Khade and labour secretary Singhal for allowing closure of industries in such a corrupt and illegal manner,” the Left-affiliated Kamgar Sanghatna Sanyukt Kruti Samiti said in a letter submitted to the collector’s office.
Hyundai at present has a production capacity of 820,000 units per annum, which is slated to go up to 850,000 units this year. With GM’s plant capacity of 165,000, Hyundai’s total capacity in the country will surpass the one-million mark.
The acquisition will help Hyundai keep its neck ahead in the race for the second spot in the passenger vehicle space, as challenger Tata Motors has ramped up its aggregate capacity to 1.02 million units per annum with the buyout of Ford’s Gujarat plant.
