The three-month long production crunch at Hyundai Motors India's Irrungattokottai factory cost the company more than its market leadership in the B and C segments, the company had to pay up liquidity damages to its dealers and distributors to make up for its inability to meet export commitments.
The company's output took a hit in the April-June period as it was working on the production line for a September launch of its hatchback Getz.
The company, which exported consignments worth Rs 1,000 crore (Rs 10 billion) in the first seven months of the financial year was able to export only 750 units of its mid-sizer Accent vis-a-vis 2,225 units in the same period of 2003. The production of the Accent fell from 10,656 units in April-July 2003 to 6,366 units in the same period of 2004.
"We had to pay liquidity damages to our dealers and distributors, a sort of penalty for not being able to produce and supply enough cars. Our sales in the domestic market also suffered because we were working towards meeting our export commitments," said a top official of Hyundai Motors India.
Hyundai exported nearly 20,000 units of the Santro in April-July period against 4500 units in the same period of 2003 while its production in the four months increased only by 12,500 units when compared with the corresponding period in the same quarter.
After a bumpy ride in April, May and June Hyundai's sales have steadied in July and are now on track to meet its yearly targets.
"We will definitely exceed industry growth. Even if we post a growth of around 20 per cent that will mean sales of 2,00,000 cars," said a Hyundai executive.
The company, which is gearing up for launch of its new hatchback Getz is pretty clear that it will not execute a price cut like its contemporaries in the C segment.
Hyundai expects the Getz to bridge the Rs 150,000 gap between the most expensive Santro variant and the most basic Accent variant.
