Hyundai to cut production from next week; may hike car prices

The country's second largest carmaker, Hyundai Motor India, said it is cutting production by 25 percent and will work two shifts instead three from the next week following a slump in demand.

"We have decided to go in for a two-shift production instead of three now as demand has declined," Hyundai Motor India Managing Director H S Lheem told reporters in Mumbai.

He was here to open a showroom in the city. The reduction from three shifts to two would see a production cut of 25 percent, he said.

The company would miss its sales target for 2008. It had set a target of selling 5.30 lakh cars in calendar year 2008.

But it expects to sell 4.90 lakh cars in 2008 because of a decline in domestic consumption and exports, he said.

The company has 8,800 persons working at its two factories in Chennai. It has 5,300 workers on permanent rolls and 3,300 as contract workers. It does not plan to retrench any, Lheem said.

In January, the company may look at raising the cost of its cars by 2 percent because of rising input costs.

"We are under a lot of pressure to increase prices. So far, we have absorbed all the input costs and also undertaken a cost reduction campaign. But may be we cannot absorb anymore," he said.