Amid onslaught by Maruti, Hyundai seeks its own space
India’s largest car maker Maruti Suzuki India Ltd has found a new admirer in its rival, Hyundai Motor India Ltd.
The continued dominance of Maruti, which controls 48% of the Indian passenger vehicle market, has led Hyundai India chief YK Koo to believe that the South Korean car maker cannot compete with the market leader given the way Maruti has been ramping up its operations.
“I think number one or number two is not our priority. But, volume wise Maruti is definitely number one because they have 1.7 million units and we are at 7 lakh. So, volume wise and number of factory wise we cannot compete, we cannot overtake,” Koo said in an interview at the launch of its next generation midsized sedan Verna that goes on sale at ₹7.99 lakh (ex-showroom, Delhi). Koo thinks Verna will lead the segment, which already has cars such as Maruti’s Ciaz and Honda Cars India Ltd’s City.
The kind of dominance Maruti has in the local market has prompted Koo to seek a different identity for his company, which is focused on “modern, premium, innovative, trend-setter and a game-changer” brand. The move seems to be a big departure from its original plan wherein the South Korean company stood out as the sole challenger to Maruti’s dominance. From around 70% market share in the 1990s, Maruti’s market share had fallen to 38% in 2012-13. Maruti, of course, has now bounced back and is in a healthier position than ever.
“Let us talk about MercedesBenz. They sell 15,000 units in 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 profile. We are strong, innovative brand. We have a very strong product lineup in terms of SUVs, passenger cars or even when it comes to being premium. The profile and the state is different. So, I cannot fight... We cannot be number one,” Koo said.
What he likes most about Maruti is their method of bringing down cost and weight in every new model. “200kgs weight reduction” in every next generation product is a “tremendous job”, Koo said, adding that Hyundai needs to learn that in order to maintain cost efficiency and match Maruti’s price structure.
“Design, quality, features in our cars are much advanced. That is our strategy... But sales are a different strategy. Our models are expensive (as compared to Maruti’s). We cannot fight. Even Eon is more expensive. i20 is more expensive than Baleno.”
So, what stops Hyundai from doing what Maruti does?
“Their standard is 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.