Hyundai: Can The Dream Run Continue?
Hyundai has become the undisputed number two in the Indian auto market, and the only one -- even rivals admit -- with the capability of giving leader Maruti a run for its money in the total volume stakes though Hyundai in India currently sells just about a quarter of the numbers that Maruti does.
Hyundai got everything right because it got the value-price-technology equation almost perfectly right from day one.
The Santro was an instant winner from the day it was introduced in the Indian market because it offered the optimum mix of space and technology in the small car market, at a highly competitive price. And with easy consumer financing available in the market, Hyundai did not have to work too hard to persuade even entry-level car buyers to go for the Santro instead of the Maruti 800. And when it launched mid-size Accent some time later, Hyundai proved that it could get its value-price equation consistently right across different segments.
But despite its great start, Hyundai made two mistakes.
The two miscalculations that Hyundai made? First, while Hyundai Santro was harping on the fact that it was a new generation car, it hadn't brought its latest engine technology to India. It was a mistake that rival Matiz capitalised on once Euro-II pollution norms were announced for the metros. Daewoo made most of the fact that every Matiz was Euro-II complaint -- while Hyundai could offer an Euro-II version only at a higher price.
Though the latter moved quickly in a damage-control exercise, the Santro did lose a bit of its sheen. it miscalculated demand for its cars. The result: when demand peaked for the Santro, it was in no position to offer the car off-the-shelf like its rivals. Buyers had to wait for three months to get a Santro after booking it.
Hyundai is moving fast to sort out its capacity problem. Work will soon start on the second phase of its Sriperumbudur car project, one year ahead of what was initially planned. An additional investment of $400 million will help expand capacity from 1.2 lakh cars to 2 lakh cars per annum. This expansion is likely to be completed by December, 2001, ahead of schedule. But even that could be a bit too late as it gives rivals that much time to grab sales that would otherwise have gone to Hyundai.
That apart, the big worry for Hyundai is that other than the Santro (the Atos in Korea), it doesn't have any other small car in its armoury. Unlike Suzuki, which is primarily a small car specialist, Hyundai can only introduce bigger cars in the Indian market either from its own product range, or those of Kia Motors, which it took over last year.
Hyundai is looking a bit vulnerable now because globally it is a minnow in the car market. It lacks the sheer money power and product muscle to keep fighting the Fords and GMs in any market. And if Ford does take over Daewoo Motors, Hyundai's number two position in India could be seriously under threat.
Hyundai has become the undisputed number two in the Indian auto market, and the only one -- even rivals admit -- with the capability of giving leader Maruti a run for its money in the total volume stakes though Hyundai in India currently sells just about a quarter of the numbers that Maruti does.
Hyundai got everything right because it got the value-price-technology equation almost perfectly right from day one.
The Santro was an instant winner from the day it was introduced in the Indian market because it offered the optimum mix of space and technology in the small car market, at a highly competitive price. And with easy consumer financing available in the market, Hyundai did not have to work too hard to persuade even entry-level car buyers to go for the Santro instead of the Maruti 800. And when it launched mid-size Accent some time later, Hyundai proved that it could get its value-price equation consistently right across different segments.
But despite its great start, Hyundai made two mistakes.
The two miscalculations that Hyundai made? First, while Hyundai Santro was harping on the fact that it was a new generation car, it hadn't brought its latest engine technology to India. It was a mistake that rival Matiz capitalised on once Euro-II pollution norms were announced for the metros. Daewoo made most of the fact that every Matiz was Euro-II complaint -- while Hyundai could offer an Euro-II version only at a higher price.
Though the latter moved quickly in a damage-control exercise, the Santro did lose a bit of its sheen. it miscalculated demand for its cars. The result: when demand peaked for the Santro, it was in no position to offer the car off-the-shelf like its rivals. Buyers had to wait for three months to get a Santro after booking it.
Hyundai is moving fast to sort out its capacity problem. Work will soon start on the second phase of its Sriperumbudur car project, one year ahead of what was initially planned. An additional investment of $400 million will help expand capacity from 1.2 lakh cars to 2 lakh cars per annum. This expansion is likely to be completed by December, 2001, ahead of schedule. But even that could be a bit too late as it gives rivals that much time to grab sales that would otherwise have gone to Hyundai.
That apart, the big worry for Hyundai is that other than the Santro (the Atos in Korea), it doesn't have any other small car in its armoury. Unlike Suzuki, which is primarily a small car specialist, Hyundai can only introduce bigger cars in the Indian market either from its own product range, or those of Kia Motors, which it took over last year.
Hyundai is looking a bit vulnerable now because globally it is a minnow in the car market. It lacks the sheer money power and product muscle to keep fighting the Fords and GMs in any market. And if Ford does take over Daewoo Motors, Hyundai's number two position in India could be seriously under threat.