Hyundai Creta: Small is the new big

The oddly named Creta—Hyundai says the inspiration came from the word ‘creative’—will be launched next week. Boasting many firsts, this compact SUV not only has the ability to disrupt the market but can also increase the size of the segment

By: | Updated: March 21, 2016 12:27 PM

Hyundai Creta

It may be a compact SUV, but the Creta can attract buyers from far and wide. Its immediate competitors are Renault Duster (it sells about 1,500 units a month) and Nissan Terrano (800-1,000 units a month).

When it launches the Creta next week, Hyundai Motor India will become the latest entrant in the compact SUV segment—where Renault and Ford have made major inroads with the Duster and the EcoSport, respectively. In fact, following the success of these models, several automakers have firmed up plans to bring their contenders in the market.

Hyundai is not new to the segment. Last decade the company launched two SUVs—the Terracan and the Tuscon.

Both failed to generate customer interest. In 2010, it launched the Santa Fe. The result was the same. However, in 2014, when the company introduced the new Santa Fe, things started to change a bit. Rakesh Srivastava, senior vice-president, Sales & Marketing, Hyundai Motor India, says that the new Santa Fe demonstrated to the Indian customer the capability of Hyundai to design a world-class SUV.

Enter the Creta. Based on the PB platform which also underpins the Elite i20 hatchback and the Verna sedan, the Creta’s cabin is expected to have elements in common with the Elite i20. But can the Creta replicate Elite i20’s success?

Srivastava believes it can. “Whichever segment we have entered of late, we have been among the strongest performers. Over the last two years, we have launched four global models in India—Grand i10, Xcent, Elite i20 and i20 Active. While we know that the SUV segment has some established players, we now understand the Indian market so well that we are sure the Creta will be a disruptive product,” he says.

Analysts too expect the Creta to do well. IHS Automotive, in fact, has forecast domestic sales to touch a massive 61,800 units by the end of December 2015, which will potentially grow to 88,300 units in calendar year 2016. “The Creta will be produced at Hyundai’s Chennai plant, which will also supply the model to key markets in South Asia, the Middle East, Africa, Europe and South America. We expect localisation efforts, limited competition in the niche segment, and a well-entrenched dealership network will help Hyundai in winning market share from rival brands,” argues Anil Sharma, principal analyst, IHS Automotive. As of now, Hyundai India has 430 dealers and 730 sales points.

Dhruv Behl, editor, AutoX magazine, thinks Hyundai has already hit the sweet spot, even more so than it last year did with the Elite i20. “Products like the Elite i20—which have upscaled the small car image—will help Hyundai succeed in the compact SUV space. Brand perception won’t be a problem as far as the Creta is concerned,” he says.

On the odd-sounding name, Behl adds, “The strength of the product—and in this case it is a very strong product—will far overshadow its unusual name. In fact, it’s already beginning to flow off the tongue far easier.”

Gaurav Vangaal, analyst, IHS Automotive, compares the interest generated by the Creta to that by the EcoSport two years ago. “When Ford launched the EcoSport, they had to call off the bookings of some variants in the wake of huge demand. A similar kind of buzz has been created by the Creta. But we need to be cautious while judging on the initial response to a vehicle,” he says. “The success lies in exploiting the R9-12 lakh segment, for which you need to sneak in the sedan customer too. The better you penetrate, the greater will be the chances of success.” Vangaal reasons that pricing will be crucial. “A price tag above R10 lakh can affect consumer psychology.”

Hyundai has employed a unique approach as far as marketing initiatives are concerned. First it communicated the name of the product. Then it released image renderings. Third it showcased the SUV to the media and select channel partners. Fourth it revealed the features of the SUV along with trim levels. “This has resulted in an overwhelming number of customers confirming their interest to buy the Creta. Within 10 days of the launch of the teaser campaign, more than 10,000 customers have confirmed purchase interest for the Creta (these are voluntary payments). Keep in mind that the price is not out yet, nor have these customers seen the vehicle. The product enquiries are over 30,000,” explains Srivastava. “The Creta will redefine the way Indian consumers look at an SUV. It will be strong, stylish, aggressive and bold. We will also target women customers.”

Hyundai has already tasted success in the crossover segment, which is a notch below compact SUVs. “The size of the crossover segment, before our entry with the i20 Active, was about 1,100 units a month. When we entered, we started selling as many as 2,500 units a months, expanding the segment to over 3,000 units a month. With the Creta, we are looking forward to making a similar impact in the compact SUV segment,” Srivastava adds.

It may be a compact SUV, but the Creta can attract buyers from far and wide. Its immediate competitors are Renault Duster (it sells about 1,500 units a month) and Nissan Terrano (800-1,000 units a month). Then there are bigger SUVs such as Mahindra Scorpio (about 5,000 units a month) and Mahindra XUV500 (about 2,000 units). On the lower end of the segment is Ford EcoSport (about 3,500 units). Srivastava argues that the Creta will not only appeal to buyers who today consider small SUVs, but it will also appeal to buyers who earlier looked at only seven-seater SUVs. “And why just these two, we are sure the Creta will attract buyers from the sedan segment also,” he says.

The Grand i10 did the fastest 1 lakh units for Hyundai India (in 10 months, 21 days), while the Elite i20 took 11 months. Although it is too early to predict, but going by the IHS Automotive forecast, the Creta might just pip its siblings.

Over the last few years, Indian car buyers have been increasingly embracing SUVs. Many today own these tough-looking vehicles and many others aspire to own one. And the lower the price, the higher the interest. In the case of the Creta, the interest has been generated without customers having seen the vehicle or having known the price. The interest generated by the Creta also points to the fact that sales of compact SUVs in the country are expected to see a massive jump in coming years as more and more models are launched. IHS Automotive estimates that 14 new nameplates will be introduced in the market by 2018, with Maruti Suzuki, Hyundai and Mahindra emerging as big winners.

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