Hyundai plots India SUV rollout as domestic competition mounts ahead of IPO

Hyundai

29/08/2024 06:09

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      South Korean automaker gearing up for $3 billion India IPO
    

        * 
      Will introduce first India-made EV, an SUV, in early 2025
    

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      To launch at least two new gasoline-powered SUVs starting
in
2026-sources
    

  
    By Aditi Shah
       NEW DELHI, Aug 29 (Reuters) - Hyundai Motor, long the
most successful foreign automaker on Indian roads, is hoping to
regain market share from increasingly formidable domestic rivals
by launching a series of new SUVs as it gears up for a $3
billion public listing in the country.
    The SUV rollout will begin with its first India-made
electric vehicle early next year and the launch of at least two
gasoline-powered models tailored for the market starting in
2026, said three sources with knowledge of the company's plans.
    The strategy of adding higher-margin offerings, pursued in
tandem with Hyundai's  005380.KS  first listing outside South
Korea, indicates its bullish outlook on the world's
third-largest car market as its China footprint shrinks and
sales at home decline.
    Hyundai's sales in India have lagged only Maruti Suzuki's
 MRTI.NS , though a rapidly changing competitive landscape has
seen domestic behemoths Tata Motors  TAMO.NS  and Mahindra &
Mahindra  MAHM.NS  eat into its market share with new SUVs
which, instead of once-favoured small cars, are the hottest
selling vehicles.
    This has lowered Hyundai's India market share to 14.6% from
17.5% four years ago, while Tata's share has nearly tripled to
14% over the same period. The next biggest foreign rival, Toyota
 7203.T  has seen its share rise to 6% from 4%.
    "Hyundai is in a tough spot," said V G Ramakrishnan,
managing partner at consultancy Avanteum. "Its primary focus
should be on how to retain market share and the only way to do
that is with a faster product roll-out."
    Hyundai did not respond to requests for comment on its India
plans. 
    
    'VIBRANT MARKET'
    India is the third-biggest revenue generator globally for
Hyundai after the U.S. and South Korea, and it has already
invested $5 billion in the country with commitments to pump in
another $4 billion over the next decade.
        "We take pride in consistently securing the
second-largest market share in this vibrant market and will
continue to elevate Hyundai as a premium brand," Hyundai Motor
Group's Executive Chair Euisun Chung said during a visit to
India in April. 
     The introduction of Hyundai's India-made electric SUV in
2025 will be followed by four more EVs through the end of the
decade as it evaluates plans to make the country a regional EV
export hub, said the three sources, who were not authorised to
speak to media. 
    Hyundai will also launch hybrid cars in India amid a broader
strategy to boost global sales by 30% by 2030, unveiled on
Wednesday, contributing to its plan of selling higher-priced
vehicles in the country to increase margins. 
    The share of its cars costing at least $18,000 - considered
upmarket in India - doubled to 15% between 2021 and 2023,
according to draft IPO papers filed in June.
    Hyundai, which plans to sell up to 17.5% of its shares in
the Indian business to the public, said it would continue this
"premiumisation" strategy, which has helped it record some of
the highest profit margins among peers in India but has come at
the cost of volumes.
    The automaker will need to maintain a fine balance between
market share and margins after its listing, said Ramakrishnan.
    "If there is a drop in either one, the company can be
questioned by shareholders," he said.
    Hyundai's shrinking market share has come despite hitting
its highest-ever sales in India last fiscal year. 

    INTENSE COMPETITION
    Hyundai entered India in 1996 and its early success in the
country, which has been a graveyard for automakers like Ford
 F.N  and General Motors  GM.N , was due to affordable
hatchbacks like the Santro, which has since been discontinued. 
    As customer preferences shifted, Hyundai launched its first
locally-made SUV in 2015. The mid-sized Creta, priced between
$13,000 and $24,000, was an instant success and is Hyundai's
biggest money spinner. 
    Hyundai now has eight SUVs in its portfolio of 13 cars but
its share of India's total SUV sales of 2.5 million units last
fiscal year fell to 19% from 24% three years ago, the IPO papers
showed.
    Of the two new gasoline-powered SUVs Hyundai is planning for
India, the first will be based on its Bayon crossover currently
sold in global markets, the three sources said, competing
against Maruti's Fronx crossover and Tata's Nexon SUV. 
    The second will be bigger than Hyundai's Creta SUV and is
expected to compete with Mahindra's XUV700. 
    The two SUVs are expected to add around 120,000 units a year
to Hyundai's volumes, one of the sources said. The carmaker sold
615,000 cars in India, of which 63% were SUVs and the remainder
hatchbacks and sedans, and exported 163,000 vehicles last fiscal
year, industry data showed. 
    Hyundai's rivals, however, are not standing still.
    Tata, India's top-selling EV maker with a market share of
more than 75%, has said it plans to launch five EVs over the
next three to four years, taking its total to 10.
    Mahindra has said it will launch seven electric SUVs and six
new gasoline-powered SUVs by the end of the decade. Market
leader Maruti is doubling down on SUVs and hybrids, and plans to
launch six EVs by 2031.
    "What brought Hyundai so far will not necessarily take it
into the future. Competition is more intense," said an Indian
supplier to Hyundai.

 (Reporting by Aditi Shah; Additional reporting by Heekyong Yang
in Seoul;  Editing by Jamie Freed)
 ((aditi.shah@tr.com; +91-11-4954 8023, +91-11-3015 8023;
Reuters Messaging: twitter: @aditishahsays))