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H.S. Lheem said production of around 70,000 cars would move to Europe in order to get tax benefits. Hyundai currently has the capacity to make around 200,000 units per year in India.

Lheem refused to confirm which plant in Europe the i20 would be built, although it is likely to be at the firm’s Turkish plant. As India is a right-hand drive market, the move won’t affect any cars destined for the UK, so production will carry on as normal.

He said Hyundai’s sales in India were expected to increase to 580,000 in 2009, up from 490,000 sold last year.