As an IPO-bound Hyundai Motor India Ltd (HMIL) gears-up for its latest innings in the country, all eyes are on the Korean carmaker and its post-IPO plans. Although incorporated in 1996, Hyundai entered India with the Santro, in September, 1998. Within a year’s time, the brand had established itself as the second-largest auto-manufacturer in India.
Ever since, Hyundai’s journey in India has been punctuated by several milestones. In 2000, the brand crossed 100,000 in sales. In 2023, the automaker recorded sales of 6,02,111 units, registering a 9 per cent increase over the previous year’s 5,52,511 units.
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Hyundai’s current production capacity, which is slowly approaching the million mark at 775,000, intends to expand its capacity, initially by 175,000 units at its upcoming Pune plant.
While the brand started its innings with the Santro – a tall, spacious but budget family hatchback, it continued a winning streak with products like the Accent, and more recently, cars like the Venue, the Exter and of course, the Creta. Hyundai’s dominance in the mid-size SUV segment has allowed it to move away from the shrinking entry-level segment of the market.
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The popular mid-size SUV, the Creta, continues to be its bestselling model, year-after-year. Launched in 2015, the Creta crossed its 1 million unit milestone in February, 2024. In 2023, Hyundai tested the premium EV market and received a positive response after bringing-in its Ioniq 5 EV to the country via the CKD route, and selling 1000 units within 9 months of the car’s launch last year, exceeding their target for the entire year by 50 per cent.
At present, India contributes to over 15 per cent of the brand’s global sales with 20 per cent of Hyundai’s current production exported to emerging markets.
The road ahead
According to Unsoo Kim, the Managing Director of HMIL, Hyundai’s IPO proceeds will be used to “invest aggressively in new products, future technology and research and development of the India unit”
Given that the sales of hatchbacks and small cars has seen a significant slowdown in the last few years, it stands to reason that Hyundai intends to further fortify its SUV portfolio in India, particularly the more premium end of the market, where it has fewer offerings. Its most premium offering thus far, the Terracan was launched over two decades ago in 2003 and then discontinued 3 years later.
Hyundai has ever since had better luck with the likes of the Sante Fe and more recently with the Tucson which remains the second-most expensive Hyundai SUV sold in India (with prices starting at ₹29.02 lakh) right behind the all-electric Ioniq 5 which is currently classified as an SUV.
Despite being the second-largest car manufacturer in the country, Hyundai’s total sales volume during FY24 was only 36% of vehicles sold by Maruti Suzuki – India’s largest carmaker. Given the massive gap, the smarter play for Hyundai is to focus on products with a higher profit margin. “There is a wide space in the mid-size SUV segment which Hyundai can tap into. Models like Tucson and upwards can be manufactured here with a high level of localisation” says Puneet Gupta, Director of S&P Global Mobility India.
While Gupta doesn’t specify which models those are likely to be, at present the only existing premium SUV products in the brand’s portfolio are the Santa Fe and the Palisade. Contrary to most experts, Gupta is also of the opinion that, given the Mahindra Thar’s outstanding success, Hyundai could look to fill that gap in its portfolio with a locally built and locally designed recreational SUV.
However, both Mahindra and Maruti Suzuki (Jimny) tapped into existing off-roadies manufacturing capabilities, (the latter, rather unsuccessfully).
For Hyundai, it would mean starting from scratch and therefore it’s unlikely to do so, says Himmadri Shekhar Roy, National Sales Manager at JATO Dynamics, a global automotive data, analysis and intelligence firm.
“Given that India was announced as a regional market for Hyundai, before 2020, there was a need to develop advanced local technology capabilities, and become an export hub” says Roy underscoring the strategic importance of Hyundai building India as a strategic hub for exports.
“Given China’s focus on EVs, a lot of foreign brands cashing-in on their ICE capabilities have faced setbacks. India is the third-largest market, so both, from a domestic demand and export capability standpoint, India is strategically very important,” he adds.
Hyundai to expand EV footprint in India
Most importantly, Hyundai intends to expand its EV footprint in the country, starting with introducing a low-cost, India-made EV while also expanding on its public charging infrastructure.
“Hyundai has already vacated the entry-level position, unlike Maruti Suzuki. They have strengthened their position in the SUV segment. Now, if they are to compete with Tata Motors and Mahindra, they need to make heavier investments in the EV segment. So that means, in addition to the Ioniq 5, they will be bringing-in one mass market EV and in near future, the Creta EV. It will also require developing their battery technology, and thirdly, building the infrastructure through their own charging network.”
In an interview with PTI, HMIL COO Tarun Garg said that the brand’s focus isn’t just on launching EVs but also building an ecosystem around them, offering significant localisation of EV components starting with battery packs and expanding to cell manufacturing, albeit in partnership with Indian companies. At the budget end of its portfolio, Hyundai plans to introduce dual CNG technology to cars like the Nios and the Exter.
In the more immediate future, Hyundai aims to expand production to make it an export hub particularly for African and South East Asian markets. According to a report by Reuters, Garg stated at a press briefing that a 30 per cent increment in volume will improve the brand’s domestic and export volumes.
In addition to that, Hyundai is also expected to channel some of the funds from the IPO to the research and development of new technologies and enhancing not only its EV capabilities but also hybrid technology.