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Old 23rd August 2017, 12:04   #1
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Default Hyundai seeks own space amid Maruti Suzukiís onslaught

Hyundai Motor India CEO Y.K. Koo says cannot compete with Maruti Suzukiís volumes, will focus on being a premium, innovative car brand

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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.

ďI 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, volume-wise and factory-wise, we cannot compete; we cannot overtake,Ē
SOURCE: http://www.livemint.com/Companies/3Q...ors_picks=true
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Old 23rd August 2017, 14:13   #2
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

It is very difficult to beat Maruti in terms of volumes. The way they are launching new products, future is secured for Maruti. Hyundai has always provided premium touch to its products starting from Eon and thats how they bring differentiation and pull customer towards it.
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Old 23rd August 2017, 14:17   #3
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

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Originally Posted by a4anurag View Post
Hyundai Motor India CEO Y.K. Koo says cannot compete with Maruti Suzukiís volumes, will focus on being a premium, innovative car brand
Such a no-brainer really. Especially with MSIL literally competing with itself in most segments below 12L, there is hardly any room for anyone else. Maruti has 10 odd models on sale now below 10L. Nobody can support such numbers. Especially with lack of imagination to come up with products, the other automakers will not manage to match the numbers in the near future.

I wonder what Mr. Koo is saying new though. Aren't their products anyway always projected as more "Premium" compared to Maruti? And thats why sometimes unreal high prices for cars?

Overall Hyundai certainly seems to lack "innovation" off late. Barring the CRETA they are otherwise quite lagging behind in innovation in product design & portfolio augmentation.
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Old 24th August 2017, 16:24   #4
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

This in in stark contrast to the early days of Hyundai India when BVR Subbu & gang used to openly talk about being the "No.1" carmaker in India.

I agree with the current line of thought. No.1 or No.2 doesn't make a difference as long as you're happy with the volumes, aren't losing market-share, maintaining profitability & keeping customers happy.

Guess he couldn't resist taking a dig at Maruti. From the same interview:

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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.
Quote:
Maruti is in the volume play in the Indian market since 1985, but we are a different company. We are a strong, innovative brand.
Can't argue with the first one. Plus, we can credit Hyundai's cars with improving Maruti's quality!
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Old 24th August 2017, 18:11   #5
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

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Originally Posted by GTO View Post
Can't argue with the first one.
Actually, can.

This - coming from the owner of an Xcent SX(o) who felt cheated when the crash results (Of the Indian Grand i10) showed a compromised structure. No use complaining about Maruti Suzuki compromising on weight too much, when Hyundai's own premium hatchback was not safe. Elite i20 was not very confidence inspiring either, with exports shifted out of India.

I agree with their current line of thought - Hyundai can maintain a premium over Maruti and it is good positioning as well. However, that has to reflect in the safety standards too.

But then, I have noticed a slight shift in the company ever since the launch of Verna 4S. Safety has been emphasised during the launch of Creta and the new Verna (this month) as well. So hopefully, it marks a shift in direction for the company.
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Old 24th August 2017, 18:36   #6
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

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Originally Posted by CrAzY dRiVeR View Post
But then, I have noticed a slight shift in the company ever since the launch of Verna 4S. Safety has been emphasised during the launch of Creta and the new Verna (this month) as well. So hopefully, it marks a shift in direction for the company.
Yes the signs are positive as far as safety is concerned. There is absolutely no excuse to omit something as basic as ABS in the automatic variants of i10, i20 and Xcent.
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Old 24th August 2017, 18:49   #7
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

Hyundai's factory utilization has been in tune of 90%+ for quite some time now, which is simply phenomenal. Plus, the fact that they get serious volumes from high margin products like i20 and Creta means they are making best use of their resources and capacity. If I were their CEO, I would be very happy with the way things are.

You run the business to make money. That's exactly what they are doing. When your 'premium' products are doing so well that you are running at full capacity, why invest more to get into the low margin rat race for numbers?

Last edited by Shreyans_Jain : 24th August 2017 at 18:52.
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Old 24th August 2017, 20:26   #8
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

Hyundai is seeking it's own space in the Indian market by being consistent. All Hyundais have -

- Sharp modern looks
- Great interiors
- Feature packed mid and top variants
- Great ride quality
- Powerful diesel engines
- Lowest noise levels in the cabin
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Old 24th August 2017, 20:46   #9
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

I somehow feel Hyundai has missed a trick in the past few years. Their market share is stuck at 16% but one would have expected them to really start challenging Maruti by now. What has happened is the opposite - for some time Maruti has been introducing premium offerings under Nexa, taking the game to Hyundai.

All Maruti needs to do now is to get into the premium SUV space and they will pretty much have the Indian market sown up.
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Old 24th August 2017, 23:48   #10
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

The scales are presently tilted in favour of MSIL. Almost all models in the C and sub C segment have takers and most of their launches are constantly in the Top 10, best seller list. Its tough to beat Maruti sales wise, given the USP it has built with the potential buyers over the generations. Though these cars are unsafe, they are extremely reliable and frugal on fuel and maintenance. The after-sales jobs are well undertaken and that leaves the owner with little room to complain.

Hyundai has its own clientele, based on its own USP. The Hyundais have improved quality wise over the years. Their new launches the 2015 Creta (means Creative but is overpriced) and the 2017 Verna are marked improvements in the product portfolio. But HMIL has to remain content for the present with its market share, remaining a distant second, sales wise. A praiseworthy step taken by HMIL since long back, is to time its India launch almost on the same date with their worldwide launch. That shows their enthusiasm, commitment and seriousness for us here and they are destined for the long haul. Whereas, it was a way of life for us here in India to get outdated products from Western car makers all through the years.

Last edited by anjan_c2007 : 24th August 2017 at 23:50.
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Old 25th August 2017, 01:08   #11
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

What Hyundai needs to understand that is they themselves have made Maruti what it is today. Without a formidable competitor Maruti would have just simple lazed away producing the same model without changes for years and years (eg the 800). I think Hyundai should keep their foot firmly on the gas pedal and continue atleast maintaining the No 2 spot as they are going to face stiff competition from the likes of TATA who can slowly gain on them through competitive products like the Tiago.
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Old 25th August 2017, 04:46   #12
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

Planning to be second, what an amazing strategy! </sarcasm>

Why in the world would someone be compelled to make such a statement is beyond me. It's a demoralizing statement to the workers behind the scenes. I can definitely understand this being made inside a boardroom where number games are played but saying it out in public just mars their reputation.

Also, Maruti being number 1 is not just a given. Yes, the current environment completely favors them but things can change drastically (think GM/Ford vs. Toyota in the US). Nothing to take away from them though. They've been really classy in their after-sales and improved strength to strength.

What I also wonder about is the onslaught of newer technologies and components that possibly don't require constant car care / service. With that differentiation, would Maruti ever face the banking equivalent of "branch vs. online banking" dilemma?
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Old 25th August 2017, 07:26   #13
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

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Originally Posted by Mad Max View Post
Why in the world would someone be compelled to make such a statement is beyond me. It's a demoralizing statement to the workers behind the scenes. I can definitely understand this being made inside a boardroom where number games are played but saying it out in public just mars their reputation.
Interesting take and yes your theory is compelling, however let me draw a loose-parallel to another sales war that has been going on for about 100 years - Coke & Pepsi.

Coke came first, Pepsi came later promising a "sweeter" experience than Coke and initially both were tasting almost like the nectar from heaven until cost-cuttings happened - they replaced sugar from actual sugarcanes to synthetically derived fructose corn sugar (yuck). But I digress, its obvious that as far as India is concerned, Suzuki is Coke and Hyundai is Pepsi. Lets crunch the numbers now :

- Coke sells more and earns more.. Coke does what it does best make and sell cola and because they had the starting advantage they've always managed to remain ahead. PepsiCo is a diversified foods business and because of that their focus on profits is not completely on beverages rather they also have to manage FritoLay, PizzaHut, Tropicana Etc. A parallel can be drawn here of Hyundai Group's diverse portfolio in elevators, logistics, aerospace, military, marine, welding, construction etc. They may not prioritize their profits from auto-division every time though they've done admirably well until now but they have other channels to work on so they may not consider being number 2 or 3 very bad at all.

- Coke has the social media following of 3 times over Pepsi (social media aka public perception aka brand memory). Remember the thanda matlab Coca-Cola ad campaign? I sometimes feel that most people in small towns will indeed say gaadi matlab Maruti.

- Coke has more net income (of course more sales, why not), Pepsi has way more gross sales and the revenue as a result. A typical Suzuki and Hyundai scenario here.

- Coke has lesser dividend payouts compared to Pepsi, I've not exactly checked but going strictly by the books Hyundai Group should be having more dividend payouts compared to Suzuki Kabushiki-Kaisha (mother companies).

Not exactly similar but its the closest brand-war parallel in my knowledge.

It really depends on the group, each business is different and because of that each company's motivation to succeed will be different. Hyundai has done the best it can by coming to India at the right time and bringing in the right products. If their business is settling down to a solid number 2, which I think it has already then there is nothing more they can do other than to maybe raise sales 5-10% YoY and hope for the best.
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Old 25th August 2017, 07:26   #14
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

It's a positive spin given by Hyundai on the ground situation. The truth is India is not a premium car market where one can push high profit models across the lineup, at least not yet. Companies like Honda, Hyundai see no point in spreading R&D resources to bottom tier, low profit products. They all want to follow Toyota strategy- High profit premium models like Innova. Everybody is seeing the market evolving into a more premium car market than before. So, the new strategy is to let the car market evolve into a form that is compatible with Car makers line up. Ridiculous to say the least and disrespectful to customers but if you have revenue sources from other markets, it's OK I guess.
But the point that they are missing is that current car penetration is very low.So, they are banking on the current 15-20 people per 1000 to turn premium. But at the cost of the balance people who would then upgrade to a Car, buy a Maruti and get locked in their ecosystem like Apple i-sheep.

Last edited by Carma2017 : 25th August 2017 at 07:34.
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Old 25th August 2017, 08:19   #15
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Default Re: Hyundai seeks own space amid Maruti Suzukiís onslaught

I think it's alright to be a number 2 in the market as long as you make good profits on your product and the bottom line remains healthy.

It's no point clamouring for the top position just for the title. Relentless pursuit of market share at the cost of profits and brand perception ends up in a situation akin to having soup with a fork. It might keep the factory busy but you end up with little.

Hyundai should focus on maintaining desirability of their products and efficient after sales service. Don't go the Honda way of diluting the brand.

I think they should be concerned about Tata which is advancing with highly attractive products and in a few years will be in a formidable position to challenge them.
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