Hyundai's new small car, codenamed AH2, will launch by Diwali and comply with all safety and emission norms
New Delhi: Hyundai Motor India Pvt. Ltd is likely to discontinue the Eon small car by the end of December as the car isn’t compliant with coming safety and emission norms and to make way for a new model, said two people with direct knowledge of the matter. The local unit of the South Korean auto maker has already informed some of its parts vendors about plans to suspend production of the Eon—Hyundai’s most affordable offering, the people, who didn’t want to be named, told Mint.
“It is confirmed that the Eon will be discontinued and some suppliers have also been told that the product will be available for just a year a few months back," said one of the people.
“This is also a very prudent decision by a successful company like Hyundai since Eon will not be to stand the new crash norms. So, they are replacing it with a better product which will adhere to all the new norms," the person said.
The new safety norms that will kick in from October 2019 will require all new passenger vehicles to undergo a mandatory crash test at a specified speed before they are brought to market. India is seeking to make its cars safe to shed the tag of having the highest road fatalities in the world.
In addition, India will enforce Bharat Stage VI emission norms from April 2020 as it tries to control rampant pollution in its major cities.
Hyundai, however, won’t leave the affordable small car space vacant as a new small car is set to take the Eon’s place. The new small car codenamed AH2 will go on sale before Diwali, when demand for consumer goods traditionally reaches its peak for the festive season. Hyundai, however, won’t scrap the platform for the Eon and may instead use it to develop new vehicles in the future, one of the people said.
Discontinuing Eon will offer legroom to Hyundai to allocate manufacturing capacity for new models at its factory complex near Chennai. The auto maker would be introducing new vehicles in the compact segment this year and the next.
In an interview in Chennai last week, Y. K. Koo, managing director, Hyundai Motor India, declined to comment about the future of Eon once the new hatchback is launched. Koo said that the company may introduce a micro sport-utility vehicle as well as a compact SUV to grow marketshare in this growing segment.
A company spokesman didn’t respond to queries from Mint until press time.
Hyundai is currently utilizing 99% of its capacity in Chennai, and plans to look at a new capacity after 2020.
Anil Sharma, associate director at MarketsandMarkets research firm said the decision to discontinue the Eon “makes sense for Hyundai as they will launch another new small car in a couple of month’s time and no point having two products canabalise each other in the same segment."
“Customers are also moving away from the mini to the hatchback segment. Also, Hyundai needs the extra capacity for its new hatchback and Creta," Sharma said.
Hyundai will looking to reignite excitement and sales in the entry-level small car segment with the new model.
Unlike some other models, the Eon which was first introduced in 2011 hasn’t been a trailblazer for Hyundai. Sales remained modest in the last four years when Maruti Suzuki India Ltd’s small car Alto continued to sell more than 20,000 units every month.
In the fiscal year ended 31 March 2018, sales of Hyundai Eon increased a marginal 1.7% to 60,495 units, recovering from a 13% decline in the previous year to 59,489 units due to the adverse impact of demonetisation. Sales had fallen 13% in fiscal year 2015-16 to 68,199 units while in 2014-15, it dropped 9.4% to 78,334 units.
In fact, Eon is the only mass market offering of Hyundai which did not log strong sales. The car lagged the strong performances of other models such as the Grand i10 hatchback, Elite i20 premium hatchback, Creta SUV and Verna sedan.