Last year, the domestic car market may have faced the worst slowdown in a decade, but South Korean carmaker Hyundai has been a surprising case of resilience. The second-largest domestic player and the largest car exporter from India, Hyundai Motor India (HMIL), has not only increased net profits by 8% in 2013-14 to R1,108 crore, as per data published by the Registrar of Companies, but has also seen its share of the 25-lakh-unit domestic passenger vehicle market touch a new peak of 16.33%.
With 60 variants across nine car models, HMIL?s strong performance has come on the back of a string of successful product launches like the Grand i10, Xcent and most recently, the new i20. With plans to enter the compact SUV and MPV segments in the next two years, HMIL aims to gain a market share percentage every year.
Rakesh Srivastava, senior VP (marketing & sales), HMIL, said the Hyundai brand, which a recent global survey valued at $10 billion and the fastest-growing, has been able to differentiate itself from rivals by focusing on premium features and sporty styling. Hyundai?s ?fluidic? design language made its debut with the new Verna in 2011 and is today reflected across the range from the entry model Eon to the Santa Fe SUV.
Hyundai is the only completely foreign-owned carmaker to consistently report profits in India. The FY14 profit growth came despite flat revenues; the year before (FY13) HMIL had recorded a 23% jump in profits to R1,025 crore, while all other foreign carmakers together accumulated losses of about R6,500 crore. FE had reported this in edition dated January 8, 2013.
?We have been here for 16 years (since 1998) and in that time we have built a good understanding of the Indian customer. While the industry was competing on price, we brought in value through the addition of features that were a first in the mass segments. Our brand focus is modern, premium and young,? Srivastava said.
Of late, Hyundai?s 600-people strong R&D centre in Hyderabad has been a cornerstone of this strategy. Through regular product clinics, the team has been able to tweak global products to suit Indian tastes. A prime example is the Grand i10, where the Indian version saw the car?s length increase and a rear air-conditioning vent added to please the rear passenger, while internal music storage space was offered in the audio system to target young buyers. ?At some point in the future, this R&D centre will develop a car in India as well,? Srivastava said.
?Over the past five financial years, Hyundai has managed to expand its product portfolio and found success in the sedan segment too, which, in turn, helps deliver higher margins,? said Yashesh Mukhi, auto analyst at Morgan Stanley.
A measure of success, Hyundai?s Grand i10, new i20 and Xcent are all among the top 10 selling cars in the country with monthly volumes of 7,000 units for the first two cars and 5,500 units for the Xcent compact sedan.
The new i20 has received over 30,000 bookings in less than two months of launch, while the Verna and Elantra remain popular models in their segments. The success of the India unit, which now contributes almost 15% of Hyundai global volumes, has led to both increased confidence and financial support from the South Korean parent. This has helped HMIL stay ahead of competition by rapidly investing in relevant products, do more local research and bolster its marketing team.
?The India unit was the first successful venture for Hyundai overseas, and soon turned into an export hub for small cars going to 120 countries. The management saw the potential of India a long time back, because of which they have invested about R3,000 crore just on the four products that we launched last year,? Srivastava said, adding that today 77 of HMIL?s 119 component vendors are Indian.
Rural sales will be the key pillar of this growth, with plans to add 40 rural outlets by December this year itself, to take the tally to 320. ?Volumes are consistently growing in rural markets. In 2012, we had 8% of our sales from rural, and this year the target is 20%. This bring us first time buyers, which we can hope to retain every time they buy a new car,? Srivastava said.
