B. S. Seo, Managing Director of HMIL, spoke to G. Balachandar about capacity ramp- up, new models and growth prospects
India’s second largest carmaker Hyundai Motor India Ltd. has grown into a $5- billion strong enterprise now. Competition or slow down failed to rattle the South Korean auto major’s position in the country. Hyundai is now gearing up for the next growth trajectory with a slew of upcoming new models with premium features and stronger focus on quality and service areas.
Has the longer-than-expected slow down impacted your growth plans in India? And, is there any change in your business plan?
Amid slow down pressures, we have been operating successfully in India. We have cumulative investments of $2.7 billion over the last 15 years. Of course, the market conditions are challenging now, and it is likely to be so during next year also. We hope next year will surely be better than this year. But for long-term, India is promising and huge growth market for us. Despite sluggish demand in domestic market, we have ramped up production to about seven lakh units a year with some adjustments in our facilities. Exports are helping us to offset the impact of domestic slow down. So, overall, our business plan remains on course.
In FY12-13 you produced about 6.4 lakh units, while your total capacity is about 7 lakh. Do you think this capacity will be adequate to support any sudden spike in demand?
We are already prepared for new demand scenario. We feel 7 lakh capacity is adequate to take care of the near-term demand. We will export 40 per cent of production this year, and we hope to repeat the same next year also. We believe that this scenario will hold good for about 5 years. If any sudden demand spike happens in the domestic market, we can always make adjustments to produce more for local market. We will closely watch the demand scenario and make investments accordingly.
The company had indicated that it would launch at least 2-3 new products every year. Is your product roll-out plan intact?
Yes, the plan is intact. In 2014, we will launch more than two new products, including a compact SUV. Compact SUV market will grow significantly, and we are preparing for that foray next year. We will also announce a new launch (Hyundai Accent) in Auto Expo 2014.
Are you looking to make any further investments in product development or R & D in India?
Yes, we are investing in developing new products for the Indian market. Our R & D unit in Hyderabad, which employs over 600 people, will be an integral part in future product development for India. For example, Indian R & D team had substantial role in design and development of Grand i10. The Indian R&D engineers have worked together with our Korea R&D engineers to develop Grand i10 to suit to unique conditions in India. For example, systems such as suspension & steering were tuned to the different Indian road conditions for better ride and handling.
Your market share in passenger car segment has been steady at about 20 per cent. Do you see any opportunity to boost it further with the upcoming launches?
Yes, we expect to increase the market share from next year onwards.
Grandi10 has been a big success, and we hope the upcoming launches, packed with premium-features, would help us increase the market share further.
How have you chalked out your product roll-out strategy to stay float amid intense competitive market conditions?
Our aim now is not to chase numbers aggressively but to become the most loved brand. We will focus more on quality while boosting volumes. Our goal is to become a brand known for quality products and customer satisfaction.
We have already established a strong presence with wide offerings across segments in India. Under the future growth plan, we will launch models with premium flavour in every segment.
For example, in the compact segment, we had i10 and i20. Grand i10 was launched with premium features in the segment. So, we will focus on coming out with variants with premium features in every segment apart from new launches. Modern premium will be our mantra in our upcoming product launches.
Will Hyundai's upcoming models be launched based on fluidic design theme?
Yes, our upcoming new models - be it the new entry-level sedan, compact SUV or other models - will be based on the new fluidic design theme. The fluidic models have been a big hit in Indian as well as global markets.
The cars launched based on fluidic designs in India have not only helped fetch stronger volumes, but also established its ‘modern premium features’ tag.
Apart from aesthetic design, the fluidic sculpture has measurable benefits in the lowering of the co-efficient drag, which makes the car more slippery through the air and saves fuel. This is in line with Hyundai’s goal of being the world’s leader in fuel efficient vehicles.
For example, the Hyundai Sonata Hybrid, designed with Fluidic Sculpture principles, has a CD (co-efficient drag) of just 0.25, among the lowest of any production car in the world. Grand i10 was latest to join the fluidic club of Elantra, Eon and Verna in our Indian portfolio.