New Delhi, Aug 6 (IANS): Hyundai Motors India Limited (HMIL) Friday said it will produce 0.7 lakh more cars this year to meet the growing domestic demand.

"We will increase our production capacity by 0.7 lakh units at our factories to meet the rising demand," said H.W. Park, chief executive, HMIL.

Currently, HMIL produces six lakh units per annum at its two plants in Sriperumbudur, Tamil Nadu.

It will make minor investments to raise the production capacity. "We will make minor investments for the increase in production capacity."

The country's second largest car manufacturer is also seeking to reduce its exports by about eight percent as global car demands are slackening.

HMIL, which exported 2.71 lakh units last year to 110 countries across Africa, Europe and Latin America, has planned to reduce its exports by about eight percent.

"Our export target for this year is fixed at 2.5 lakh units, which is slightly less than last year. We want to focus more on meeting the domestic demand."

Demand was high from Europe last year. Now it has come back to normal because of the "scrappage" scheme.

European countries had launched the scheme in 2009 that allowed selling new cars at a discount in exchange for older cars to raise sales.

In July, 2010 the company sold a total of 50,411 units as against 45,539 units in the like period of the corresponding year. The domestic sales accounted for 28,811 units where as the exports faced a slight decline of 3.3 percent at 22,346 units.

The company also said it planned to launch its Sports Utility Vehicle (SUV) Sante-Fe around the end of this year.

Hyundai, which started operations in India in 1996, produces compact hatchbacks Santro, i10 and i20 and sedans such as Accent, Verna and Sonata.