Over the last three days, the Hyundai pavilion at Auto Expo 2016—the pavilion is one of the biggest at the auto show—has been attracting a lot of footfalls. “Our theme is Experience Hyundai, and the Auto Expo is a very important platform to showcase our strengths in design, technology and future products,” says YK Koo, MD & CEO, Hyundai Motor India Ltd (HMIL).
Before taking up the current position, Koo has worked with HMIL for over nine years in two different roles—he was one of the founder members of the company’s operations during 1997-2001 and played a key part in building sales & marketing operations during 2008-11.
At the Expo, Hyundai unveiled the third-generation Tucson, which will fill the wide pricing gap between Creta and Santa Fe. (While the Creta is priced R8-14 lakh, the Santa Fe is priced R27-30 lakh.) Hyundai also showcased its sub-compact SUV concept—this project is being handled by the company’s R&D centre in Hyderabad—which could see the light of day within three years. In an interaction with Vikram Chaudhary of The Financial Express, Koo talks about the company’s plans for rural India, and new product design and development that is taking place in India. Excerpts:
It’s been almost two decades since Hyundai entered the Indian market. What all has the company achieved since inception?
Hyundai Motor Company (HMC) has, until now, invested $3.2 billion in India. The production capacity of the Hyundai Motor India Ltd (HMIL) Chennai plant currently stands at 6.8 lakh units annually, which can be expanded to a maximum of 7.2 lakh units. Our market share, in the passenger vehicle segment, has grown from 15.4% in 2013, to 16.2% in 2014, and it stood at 17.3% in 2015. So, we have grown almost 1 percentage points every year over the last three years. In fact, last three years have been particularly good for HMIL—as we grew, our three cars also consecutively won the Indian Car of The Year awards. The Grand i10 (2014); Elite i20 (2015); Creta (2016).
Since inception, we have achieved total sales of 64 lakh units, of which 41 lakh units have been in the domestic market and 23 lakh units have been exports. In fact, HMIL’s contribution to HMC currently stands at 13%. In 2015, while the Indian passenger vehicle industry grew 8.5%, HMIL registered a growth rate of 16%.
We aspire to be the most loved, trusted and caring car manufacturer in India. The success of the Creta in both Indian and overseas markets—and the SUV was launched just six months ago—is a testimony to the local quality standards that are benchmarked with the global standards of excellence. The Creta is currently exported to 92 countries.
Why are your export numbers going down? Is it only because your Chennai plant is working at around 95% capacity utilisation and the increasing domestic demand means exports are gradually taking a back-seat?
Countries such as Brazil, Russia, China and some in Latin America are facing economic challenges. So, exports to such regions are also becoming a challenge. In such a situation, domestic market should always be a priority. In fact, soon we will become the second automobile company in India to touch the 5 lakh annual sales mark, and the fastest to do so. Last year we sold 4.76 lakh units domestically.
With increasing sales, how has your sales channel evolved?
We have worked hard to strengthen our sales channel. The dealership network now stands at over 437, with additional 1,100 service points and 327 rural sales outlets (RSOs). We believe that the customer is the best advocate for the brand and also the key stakeholder. Therefore, as a company, all our energies are directed towards meeting and exceeding customer demands—hospitable sales service, strong after-sales support and family-like sales professionals. Going forward, we will focus more on our new initiative called the Global Dealership Space Identity (GDSI)—a dealership design strategy aimed at creating a unified and a premium look at all our stores.
When are you entering the MPV segment?
Our priority, as of now, is SUVs. In fact, we believe SUVs are the right product for the current Indian infrastructure.
When will the sub-compact SUV showcased at the Auto Expo see the light of day? Where is its design and development work taking place?
The team in Hyderabad works in collaboration with their counterparts in Korea to create new products. The contribution of Hyderabad R&D in new car design and development has been increasing gradually—for the Creta, about 55-60% development work took place at Hyderabad. For our sub-compact SUV, the centre could contribute as much as 70-80%.
How are enhancing the digital presence of Hyundai India, in order to attract the millennial consumer?
We follow a smart marketing strategy, in which there is a strong emphasis on digital media, with a robust 360-degree marketing plan. Our focus is on offering best-in-class experience to customers across all touch points—we call this Experience Hyundai. To reach out to the millennial audience, we have significantly strengthened our presence across digital domain. We enjoy one of the largest followings on social media, with over 6 million fans on Facebook, and have novel techniques to connect, engage and interact with the digital audience.
With rural demand slowing over the last two years, almost all manufacturers took a hit. How does Hyundai intend to raise its market share in rural India, going forward?
Rural markets—which are the emerging markets within India—are a key component in our growth strategy. Our approach is going to be an ideal mix of dealerships, service initiatives and increased RSOs. We will also focus on rural-specific marketing strategies to communicate with target audience in customised languages across geographies.
Our channel network has been working to create regional advocates in key rural markets. These advocates are local influencers who share with potential customers the Hyundai value proposition. We are constantly increasing our market share and today almost 22% of our sales come from rural India. With the success of the Creta and the strong sentiment the vehicle enjoys—remember, it’s also an aspirational SUV—we are confident that we will be able to consolidate our market share in rural India further.