New Delhi: As part of its efforts to expand portfolio and match up with the changing dynamics of the Indian auto market, Hyundai Motor India Ltd will showcase a concept of a compact sport utility vehicle (SUV) during the Delhi Auto Expo in January.
It is not clear if the company will look to take advantage of lower tax rates on models that are shorter than 4m. “The details of the car will be worked out at a later stage,” a Hyundai spokesperson said by phone on Wednesday.
In the 2006 Union budget, the then finance minister P. Chidambaram gave special benefits to small cars to boost local production and promote India as a global small-car manufacturing hub.
The budget proposed an 8 percentage point excise duty reduction to 16% for cars shorter than 4m and with petrol engines displacing less than 1,200cc or diesel engines smaller than than 1,500cc.
Mahindra and Mahindra Ltd is also developing a sub-4m version of its utility vehicle Xylo, expected to be launched in India early next year.
Hyundai’s announcement comes within weeks after Maruti Suzuki India Ltd expressed its desire to enter the fast-growing SUV segment at a time when increasing competition in its focus area—small cars—is eating into its market share.
Maruti’s SUV is likely to be production-ready in two years, Mint reported on 15 November.
Last week, Maruti’s managing director Shinzo Nakanishi said the company aims to regain 50% market share in the passenger vehicle market.
Multi-purpose vehicles, multi-utility vehicles and SUVs are the company’s focus areas. “This segment accounts for 18% of the total market,” said Nakanishi. “We are zero there. The question is how to fill up this area?”
Maruti’s market share plummeted to 39.4% in November due to increasing competition and a series of strikes that hurt its production.
“There is also a market for such vehicles (SUVs) in the longer-run as people aspire for bigger cars. Last year, the total number of units sold in that category was at least 250,000,” said Abdul Majeed, auto practice leader, PricewaterhouseCoopers. “So, all the companies who do not have a presence in that segment will try to develop a vehicle quickly.”
The Hyundai spokesperson said the company will also showcase its crossover utility vehicle Veloster at the expo.
“Veloster has been a success for us in the United States since its launch,” said the spokesperson. “We want to see what kind of interest it generates among the Indian consumers.”
Hyundai sold the Veloster first in South Korea in March and later in the US. The car is positioned to target young buyers.
It was unveiled at the Detroit Auto Show in January.
Separately, Hyundai said in a statement it will increase the prices of all its models from January.
“The pressure of rising inflation, higher fuel costs and sharp rupee depreciation has compelled us to look at a price increase on our models. All these factors have now made it very difficult for us to absorb the rising costs,” said Arvind Saxena, director (marketing and sales) at Hyundai Motor India.
“The price increase will come into effect in January 2012. We are in the process of working out the specific increase on the various models. Broadly the increase will be 1.5-2% across all models.”