BackHyundai readies Swift rival to expand market share
New car likely to be positioned between i10 and i20; its diesel engine to be smaller than that of Swift
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New Delhi: Hyundai Motor India Ltd (HMIL), the country’s second-largest car maker by sales, is preparing to introduce a small car to take on Maruti Suzuki India Ltd’s best-selling Swift, according to four people familiar with the development. The Swift is the country’s second largest selling car after the Maruti Suzuki Alto.
Hyundai is seeking to boost market share in the world’s second-fastest growing car market as sales of its cars such as Santro and i10 decline. Between January and November last year, sales of the Santro and i10 declined 35% and 30%, respectively. Mint could not obtain model-wise data for December.
The firm’s market share in the passenger vehicle segment, which includes cars, vans and utility vehicles, marginally declined from 14.84% in the last fiscal to 14.36% in the first nine months to December this fiscal, according to data provided by industry lobby group Society of Indian Automobile Manufacturers, or Siam.
The new car will be positioned between the i10 and the i20. It will have a diesel engine smaller than that of the Swift, giving customers an alternative in the segment. This also puts to rest speculation about an i10 being launched with a diesel engine.
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The car will follow the so-called “Fluidic" design that characterises Hyundai’s i20, Verna and Elantra. The diesel engine is likely to be the smallest in Hyundai’s portfolio at 1.1 litres.
“This is a very important model for us as we do not have any other new product, besides refreshes, scheduled for this year to drive growth," said a company official familiar with the development who spoke on condition of anonymity.
The new car, which is code-named BA, is being developed by Hyundai in South Korea. A team of at least 100 Indian engineers is associated with the project and are currently stationed at the company’s Seoul plant.
“The firm is in the final stages of its prototype and trial runs will begin around April-May this year," said a second person familiar with the development who, too, did not want to be identified.
Apart from the new car, the firm will also bring in a variant of the i10 by the end of this year.
According to a consultant, while there is space for the new car, the company may see cannibalization of its own products.
“Since this car will be new, it is likely to have advanced features and may offer better value. So it may chip volumes from both i10 and i20 apart from its own independent volumes," said Pradeep Saxena, executive director, TNS Automotive, a research firm. “Having said that, I think that a price slot between i10 and i20 is available but a lot depends upon if they will be able to hit sweet spot in terms of pricing. Also, a lot will depend upon government’s policy with regard to diesel pricing."
The Swift is equipped with 1.2 litre petrol and 1.3 litre diesel engines, starting at ₹ 4.91 lakh and ₹ 6.14 lakh, respectively. Hyundai’s i10 is only offered with a petrol engine and starts at ₹ 4 lakh. The i20’s petrol version starts at ₹ 5.21 lakh and the diesel variant is priced at ₹ 6.63 lakh.
Responding to a detailed questionnaire sent to Hyundai on Monday, a spokesperson said the firm’s policy is not to comment on future models.
“However, we continuously analyse the current and emerging segments based on customer requirements to launch future models," the spokesperson said in an email. “We have plans of launching one-two cars every year for the next few years."
The firm hopes that the small car segment will continue to be on an upward trend in the country in 2013.
“Although market conditions are tough for the Indian auto industry, we are hopeful that the small car market will continue to grow in 2013 as well. The reduction in price differentiation between diesel and petrol has led to an increase in demand of petrol cars. We feel the similar trend in 2013 as well," the company spokesperson said.
Separately, the Indian unit’s managing director Bo Shin Seo said in an interview at its Chennai factory that the firm is not worried about market share and is planning to enter the small sports and multi-utility vehicle segment.
“Our market share (in the passenger car segment) is increasing steadily over the years from 19.3% in (calendar year) 2011 to 19.5% in 2012. So, it is increasing. Only we don’t have small SUVs (sports utility vehicles) and MPVs (multi-purpose vehicles). We never had. We are preparing now. Some may say that our market share may go down but we are not worried about it. We have enough potential to influence market share," he said.
He said the company is also devising an alternate strategy to establish itself as one that’s also known for bigger cars.
“My target is to strengthen the HMIL brand. It is more important that Indian customers should accept our products as the most loved car in the country. I am comfortable to say that HMIL will focus on premium cars such as the Elantra, Sonata and Santa Fe," he said. “We are doing more than 10,000 unit retail sales of the Eon (its smallest car). So, I am satisfied (with Eon). The focus is on bigger cars such as Verna and Elantra."
However, Bo said the firm still needs to stabilize operations in India by focusing more on productivity, production systems and quality. He’s not worried about the gloom in the Indian car market. In December, car sales fell 12.5%, the second consecutive monthly decline and the fourth in five months.
“We see immense potential for HMC (Hyundai Motor Co., the South Korean parent) here in India. Last year, the passenger vehicle segment grew at 9% and as compared with the GDP (gross domestic product), the growth is higher. This year, we expect the industry to grow at more than 6% and up to 10% on the higher side," Bo said.
In the nine months ended December, car sales shrank 0.33% to 1.38 million.
On 9 January, Siam cut forecasts for the car market for the third time in a row and now it expects the car industry to grow at 1% during the fiscal.
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