Hyundai Motor India Ltd’s Santro, which introduced the tall-boy car design to India in the early 2000s and unsettled the position of rival Maruti Suzuki India Ltd’s Zen, is set to make a comeback to take on a new rival.
The new version of Santro is due to stage a comeback in the first half of 2018, said two persons familiar with the development, including a Hyundai executive.
The company is hoping the Santro will help it counter Renault India Pvt. Ltd’s Kwid, which has become India’s fastest growing small car since it was introduced a year ago, and hurt the sales of Hyundai’s entry-level Eon.
Renault has so far sold more than 80,000 units of the Kwid, for which customers have to wait as long as eight months to receive delivery.
The Santro helped establish the South Korean company as India’s second-largest car maker, behind Maruti Suzuki.
The first-generation hatchback was phased out in 2014.
Hyundai expects “huge volumes” from the new model, the Hyundai executive cited above said, describing the car as a trend-setter in India. He asked not to be identified.
It will be crucial in helping Hyundai meet its 2020 target of selling 1 million units. The auto maker sold 484,324 units in the year ended 31 March, up 15.13% from the previous year.
Maruti Suzuki has a target of selling 2 million units by then.
India is expected to be a 5 million car market by 2020 from 2.78 million in 2015-16.
True to its genes, the new Santro will also be a tall boy—auto industry lingo for small cars that are unusually tall to maximize cabin space.
The new Santro has been designed in India by Hyundai’s research and development (R&D) centre in Hyderabad, based on findings of its marketing and sales department, the executive added.
The project to develop and launch the new Santro at a cost of Rs1,000 crore was approved by the company’s Seoul headquarters.
India will serve as the global manufacturing base for the new Santro, which will be sold around the world. “It will be exported to markets globally, especially to those which prefer small cars. India will witness its global launch,” the executive added.
Typically, small cars are sold in South Asia, East Europe, Africa and West Asia.
The prototype of the car is being developed by Hyundai’s engineers in South Korea.
A Hyundai India spokesperson did not respond to an emailed questionnaire.
The entry-level segment, dominated by Maruti Suzuki’s Alto, has been on a decline in recent months and new launches could rejuvenate it, said Abdul Majeed, partner and national auto practice leader at PricewaterhouseCoopers.
Sales in the small-car segment declined to 524,247 units in 2015-16 from 542,632 in the previous year.
“People are skipping the segment as there are no exciting products. That’s why Kwid was such a success. India is a product-driven market,” said Majeed.
A second person familiar with the matter, who also did not want to be identified, said Hyundai’s so-called fluidic design has not been considered for the new Santro in order “to retain the DNA of the earlier Santro”.
Fluidic design refers to Hyundai’s philosophy of flowing design and “nature made of curves and not right angles” —a concept incorporated in most of its cars such as the Eon, Grand i10, Elite i20, Verna, Elantra, Sonata and Santa Fe.
“Fluidic design is slightly intimidating for the entry-level customers,” this person added.
In anticipation of an evolving market that could well expect a lot more by the time the car is launched, the new Santro will come with a fully automatic transmission variant, a first in the segment, said the Hyundai executive. An auto-manual transmission variant or so-called semi automatic model is also being considered, he added.
Prior to the launch of the new Santro, Hyundai India will also make new investments to build additional production capacity. Currently, Hyundai’s manufacturing plant in Sriperumbudur, near Chennai, has a capacity to produce around 650,000 cars a year and the firm is running at full capacity. It meets domestic demand by cutting down on exports.
Hyundai’s exports declined 15.17% to 162,221 units in the year ended March. During the period, India’s passenger vehicle industry grew 7.24% to 2.78 million while exports grew 5.24% to 653,889 units.
A joint manufacturing facility with Hyundai’s subsidiary Kia Motors Corp. may also be considered, marking the entry of another Korean brand into the market, the Hyundai executive said.
“Hyundai can invest itself or may build a joint manufacturing facility with Kia. Details regarding this are yet to be finalized,” the executive said, adding that the company can build a factory in “six months flat”.