Amid onslaught by Maruti, Hyundai seeks its own space
India’s largest car maker Maruti Suzuki India Ltd has an unlikely admirer —its fiercest rival Hyundai Motor India Ltd.
The continued dominance of Maruti, which controls 48% of the Indian passenger vehicle market, has led Hyundai India chief Y.K. Koo to declare that the South Korean car maker cannot compete with the market leader, especially given the way Maruti has been ramping up operations.
“I think No. 1 or No. 2 is not our priority. But, volume-wise, Maruti is definitely No. 1 because they have 1.7 million units and we are at 7 lakh (700,000). So, volumewise and factory-wise, we cannot compete; we cannot overtake,” Koo said on the sidelines of the launch of Hyundai Motor India’s next-generation mid-sized sedan Verna that goes on sale at a starting price of ₹7.99 lakh (ex-showroom, Delhi).
The Verna, he added, will lead a segment which already has the likes of Maruti’s Ciaz and Honda Cars India Ltd’s City.
Maruti’s dominance in the local market has prompted Koo to seek a different identity for his firm, one that focuses on a “modern, premium, innovative, trendsetter and game-changer” brand.
The move is a big departure from Hyundai’s original plan in India wherein the South Korean company saw itself as the sole challenger to Maruti.
To be sure, Maruti’s market share fell from around 70% in the 1990s to 38% in 2012-13. But since then, it has bounced back to 48%, well clear of its nearest rival.
“Let us talk about MercedesBenz. They sell 15,000 units a year and BMW sells only 7,000 units. Do you think BMW is not a good player? They are a premium brand. Maruti is in the volume play in the Indian market since 1985, but we are a different company. We are a strong, innovative brand. We have a very strong product line-up in terms of SUVs (sport utility vehicles), passenger cars or even when it comes to being premium,” Koo said.
What he likes most about Maruti is its focus on bringing down costs and weight with every new model that it introduces. “A 200kg weight reduction in every nextgeneration product is a tremendous job,” Koo said, adding Hyundai needs to learn how to do that in order to maintain cost efficiency and match the price structure of the market leader.
“Quality, features in our cars are much advanced. That is our strategy... But sales are a different strategy. Our models are expensive (compared with Maruti’s). We cannot fight (there). Even Eon is more expensive. i20 is more expensive than Baleno.
What stops Hyundai from doing what Maruti does?
“Their standards are different. Hyundai is a global brand. We have to maintain a certain standard in terms of design and quality. We cannot reduce too much weight. It is not possible,” he said.