Business & Economy Magazine IIPM News Edition: Dethroned emulator

Monday, July 07, 2008

Dethroned emulator

When IIPM comes to education, never compromise

Tata Motors rallies to second position, reveals Hyundai’s tender spot

Hyundai,

“Analysts have a perception that there is an evident lack of innovation on Hyundai’s part”

after 10 long years of its existence in India, finds itself in a quagmire. Considered one of the best performing automobile company in India, Hyundai has landed itself in hot waters. And why not, Tata Motors has stormed into Hyundai’s territory, dislodging it from its coveted position. Auto India’s Rananjoy Mukerji told 4Ps B&M, “Tata has overtaken Hyundai because of its indisputable diesel line up. It is a question of survival for Hyundai now and it is time for it to become innovative. Hyundai must include more small cars with diesel options in its portfolio to regain market share.”

If Hyundai is to be believed, then this South Korean company knows its shortcomings well in advance. When 4Ps B&M asked H.S. Lheam, CEO, Hyundai India, about the company’s prospective small car plans, he made it clear, “As soon as our second plant in India becomes operational, we will definitely bring in a sibling to the Santro.” Small cars are indeed the future of Hyundai in India and Hyundai will, without doubt, base its future sustainability on its small car portfolio. Even though Hyundai understands the market dynamics well and its first and only successful small car still sells like hot cakes, there is a glass ceiling of sorts. Unlike Tata, which has climbed the ladder to the number two spot with its somewhat industrial Indica, Hyundai has been unable to replicate the same with the so called ‘internationally acclaimed’ Atos Prime (Santro)! The car which was at one time the number one seller has been suffering from declining sales and is now sitting at the number three spot. Analysts believe that there is an evident lack of innovation on Hyundai’s part and that alone is responsible for falling sales. Though there is abuzz in the industry that Hyundai is gearing up to develop a 1.1 litre CRDi engine for its small cars, Santro and Getz, there is no official news from the horse’s mouth. Hyundai should possibly take hint from the fact that the diesel powered Accent and Verna have been bringing in volumes for the Korean major. Clearly, the Indian consumer is more inclined toward economy and the inherent practicality of a diesel engine.

The other heart burn Hyundai faces in India is its zero brand appeal when it comes to luxury car segment. It has not managed to popularise its range of high end cars like Elantra and Sonata, despite a boom in premium car segment. As per SIAM, the company sold just over 352 high end cars in April-June 2007-08 and that is pathetic when the luxury car segment is growing at a stunning 18.3%. Though Hyundai tried to revive its flagship model Sonata Embera by offering a 2 litre VGT loaded CRDi motor, but to no avail. Today, Hyundai stands beaten at both, small and premium segments, and definitely needs a strategic make-over to reclaim its second position fast.