Hyundai will not manufacture more than 10,000 units of the new Santro as the company focuses on profitability, says MD Y.K. Koo in an interview
Chennai: Despite being the second-largest carmaker in India, Hyundai Motor India Ltd has not been able to expand its market share in the last three years. The re-launch of the once popular hatchback Santro, along with a new compact hatchback, can be instrumental to the company’s performance and profitability, especially when retail sales are slowing down due to worsening macroeconomic factors.
In an interview, Y.K. Koo, managing director, Hyundai Motor India Ltd, said the company will not manufacture more than 10,000 units of the Santro as the company focuses on profitability. Edited excerpts:
Why bring back the Santro?
Everybody has a good memory about brand Santro. It is the product that built this company (HMIL) in India as it is today. It has symbolic heritage and legacy, launched 20 years ago. It was a gift to the Indian market, as the first tall-boy design, first car to comply with Euro-III (emission norms), first with multiple-fuel injection engine.
So when we were developing a new tallboy, various people, including customers and dealers, asked us to name it Santro. This new product will help Hyundai to increase volumes, profitability and market share. We can hopefully touch 17% market share. Most importantly, we are happy to bring back the Santro to the Indian market.
How will you sustain customer interest beyond six months? Most manufacturers have struggled there?
When Maruti increased production to 6,000-7,000 units a day, it was not a joke. Despite that, waiting periods are for a month. Maruti Suzuki controls the Indian market. That’s why Hyundai won’t increase volume. We don’t want to sell more than 10,000 units a month, it is a very reasonable number, but demand is much more powerful for Santro. The problem right now is that everybody is talking only about volume, and it is very dangerous.
So are you saying there isn’t enough demand to increase volumes?
It’s not a joke. Maybe they can continue with 4-6 months’ waiting period without increasing volumes. Supply and demand in a good balance are very, very important. So, 8-10,000 is reasonable to continue the brand value and identity. Suppose on the Creta, we still have two months waiting since it was launched three years ago. We are selling more than 10,000 units, it is more than enough, we are happy. Brand power, brand value and brand equity are most important.
You are also coming up with a compact sport utility vehicle (SUV). How will you manage your production numbers?
We expect some cannibalization for Eon and Grand i10 from Santro. When we launch the compact SUV, there will be some cannibalization with the Creta. So we can manage.
Earlier, some countries used to have completely built unit (CBU) imports. But because the government policy has changed to protect the industry, the tax on CBU was very high. On completely knocked down units (CKD), it is low. So it is changing from CBU to CKD. That gives us 50,000 more units annually by next year. That’s how much the production capacity will increase without any extra investment.
Where do you see Hyundai in the next five years as new norms kick in?
In the last 20 years, we have focused on the brand, product and customer satisfaction. It was not built overnight. When we came to the Indian market 20 years ago, it was with Toyota, Honda, General Motors and Ford. Who is the leader among them, now? Anybody can come and launch a product with a good dealer network, organization, brand and people, but to continue that momentum for another 10 years is difficult. There are many, many, many factors. The market will change, but the ones who will continue to invest in their brand identity, quality, customer satisfaction, and bring in new products and technology in the market, will be the real winners.
After the success of Creta how will you cater to SUV segment?
We have a very strong product line-up. We will manufacture here and export to emerging markets, Latin America, Africa and West Asia. Even the QXI (a compact UV) will have the same model. We may even consider manufacturing the Tuscon from the Chennai plant. We need Creta customers to upgrade to a larger seven-seater, maybe the Tuscon. With Creta, we have a huge customer base that we don’t want to lose.
Are you still launching the EV next year in India?
We will launch the Kona EV in India to test the market. Kona will be brought to India in a CKD form, but the next step will be to manufacture it here. We are ready to introduce electric vehicles step by step in India, but we need the government to support them by lower import duties, goods and services tax and maybe even subsidies. Our vice chairman has already made that commitment to the Indian market.
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