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Old 25th April 2005, 23:22   #1
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Default Hyundai India's troubles-Business Today Article; May 8, 2005

Ever wondered what's on with Hyundai India? Why are they in a conundrum? Some answers to their problems lie in this fortnight's Business Today. Excerpts from the article and personal points of view:

Compact class: Sales down by 4.28% over previous year. (includes Xing and Getz)

Mid-size: Sales down by 7.45 % (Accent only)

Executive: Elantra brings in the last few percentage points of the sales graph.

Premium: Sales down by 7.56% (Sonata sales behind Camry as well!)

There's more. Hyundai grew by a rather paltry 10%, while market leader Maruti grew by 17% and Tata, a staggering 34%.

The problem areas

Lets begin with a small job called production line expansion. Clearly, an increase in capacity from 1,50,000 units to 2,50,000 units should have been a cakewalk, especially when the 1,50,000 unit plant took no more than 18 months to setup. Right?

Wrong. Hyundai messed it all up. When the new capacity plant started running full-steam, the robots played havoc. Breaking down 8-10 times a day, they halted production several times. Result? Hyundai lost nearly 20,000 units in sales. Dealers could do nothing but turn customers away. That compounded matters as the market buzz believed that Hyundai no longer can deliver on time. Sales were further gnawed away by rivals.

If that is not all, Maruti is back. And in a resurgent manner. The Alto sales have doubled over the last year. The Wagon-R from the 6000 units a month average is now in the 8000+ mark. The Esteem has revitalized itself in the new avtaar, with sales of the ageing sedan doubling over the last couple of months. Even the Baleno has seen a more than 3 times jump in sales over the previous year. All this has meant that the Santro sales grew by no more than 3000 units over the previous year, inspite of the bumper Rs. 3 lakh Santro bonanza. The ageing Accent suddenly feels overpriced in a market where all its rivals have cut prices to induce volumes. The Ikon currently sells 400 units a month more than the Accent. Suddenly Hyundai is feeling the heat.

The production line expansion was meant to handle the small car exports commitment issues as well as further expansion of local production lines to handle increased sales in the future. While the exports scene looks bright, the same cannot be said about domestic sales. Inspite of 2 new cars last year, the Getz and Elantra, neither have been able to set the sales chart afire.

First, the Elantra. Great car, but poor positioning has relegated it to the last position in its segment. The Getz. Another great package letdown by a higher markup. Then both car prices see revisions. But its too late. The market has already perceived them to be duds. And Hyundai's first mover advantage in the B+ segment will see Maruti as its biggest beneficiary. The Swift, scheduled for a launch next month will totally change the rules of the game. Smart looking and modern, it is like no other Maruti ever launched here. Maruti thinks it can sell 4000 of these beauties a month. Really? Yes, they just might. Maruti plans to position the base model at a lipsmacking Rs. 4 lakh. Yes, you read it right. Coupled with the proven Esteem 13BB engine and looks to die for, Maruti finally has got up to the concept of crossover, modern cars that combine practicallity and style. If that is not all, the Wagon-R might undergo a southwards price revision. Result? The Santro and all its desperate "5 seater" advertising cannot prevent the smart Wagon-R from snatching sales from Hyundai's bread and butter model.

That isn't the end of Hyundai's woes. In the premium segments, they are virtually non-existent. The Terracan is a quiet player in the market, but that is also because the 20 lakh + SUV segment is yet to catch on. The Sonata is now far too old a platform. The Accord outsells it 4:1. The new Sonata is expected later this year, but can Hyundai convince the market that it truly can build an Accord beater?

Hyundai is in recouping mode. Currently a new Santro platform is being worked on. Expected to make a 2008 entry, the next gen Santro should be far removed from its current avtaar. The Getz will be repositioned in the price chain. The new Accent should be here in 2006, but how serious is Hyundai on it is something to be watched. The new Sonata is going to be Hyundai's fighting attempt on correcting its Premium segment image in India. The Tuscon will need more than just luck to stay afloat in a market where the CR-V and Endeavour set the benchmark. Its work is cut-out, but yes it needs to come back. Even if it means a certain Mr. Subbu losing his hair over it.

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Old 25th April 2005, 23:29   #2
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Rev,

thats right ! the new plant had problems and Hyundai could not meet the targets ...and they have taken the export thing that is eating up santro sales in the local market. even we did not get schedules for the month of march for hyundai hoses ....now its back in line .....so lets hope things turn around.

but if hyundai planning a big bang entry with the new sonata and expect it to create havoc in the market and outsell the accord ...they must be dreaming !!

infact i would like to see them launch the Santro CRDi 1.1 asap....and then watch how the markets take to that !

cheers
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Old 25th April 2005, 23:30   #3
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hyundai's losses in india are more than made up for by it's gains in the US market
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Old 25th April 2005, 23:31   #4
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Funnily enough, The Economic Times ran a feature on the auto sector in India today telling us that Maruti lost 2% in Market Share this year while Hyundai gained 2%.

http://economictimes.indiatimes.com/...id-1086723.cms

To quote:

"The competition in the passenger car sector has turned severe with almost all the global majors establishing their presence.

While Maruti lost market share by 2% for the fiscal against the direct competition from Hyundai which gained market share by 2%. Tata Motors and Honda Siel also increased their market share by 1% each.

Networth stock broking firm expects the growth in passenger car segment to slow down considerably due to higher base effect of last year, rising fuel prices and steep rise in raw material costs."

Again:

"Maruti Udyog

Current price: Rs 439
Target price: Rs 375

EPS: 26.01
P/E ratio: 16.89

The lower than industry growth of Maruti at 13.5% in FY05 is due to its non-existence in diesel segment and weak presence in sedan segment which has grown faster than industry average. For FY06, Networth expects to post volume growth of 7.5% against the industry growth of 12%."

I wonder which one is correct - the latter talks of Maruti's falling sedan sales while the original post in this thread talks about Maruti's rising sedan sales.

Last edited by Steeroid : 25th April 2005 at 23:33.
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Old 25th April 2005, 23:33   #5
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Quote:
and they have taken the export thing that is eating up santro sales in the local market.
True NC. Infact the article mentions it as one of the main reasons why the domestic orders couldn't be met. Sure that was a year back, but it honestly has played havoc with Hyundai India's plans. Hope things sort out sooner than later.

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Old 25th April 2005, 23:53   #6
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Quote:
Originally Posted by Revvmaster
THyundai India's troubles-Business Today Article; May 8, 2005
You mean April 8th, dont you?
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Old 25th April 2005, 23:56   #7
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Nope its May 8. Its a fortnightly magazine. April 8 is way past gone. The May 8 issue has just hit stands.

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Old 26th April 2005, 08:46   #8
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The Accent is due for a change. Santro revamp is a long overdue. Till then they should deop the Getz prices. If you think Hyundai has problems - look at Ford, only 180 Fusions sold last month - man they got it wrong - something anything karo ! Ikon is aging - they got to move fast

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Old 26th April 2005, 09:56   #9
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Quote:
Originally Posted by ajmat
The Accent is due for a change. Santro revamp is a long overdue. Till then they should deop the Getz prices. If you think Hyundai has problems - look at Ford, only 180 Fusions sold last month - man they got it wrong - something anything karo ! Ikon is aging - they got to move fast
Thats true Ajmat. I was in US (SF) recently and there also Toyota, Nisaan etc are beating Ford. The enjine of Fusion might be good but i find the car ugly. Ikon is way old now and its boring to look at it now. (No offense to Ikon owners)
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Old 26th April 2005, 10:02   #10
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Quote:
Originally Posted by ajmat
The Accent is due for a change. Santro revamp is a long overdue. Till then they should deop the Getz prices. If you think Hyundai has problems - look at Ford, only 180 Fusions sold last month - man they got it wrong - something anything karo ! Ikon is aging - they got to move fast
Ford lost it out with its pricing on Fusion
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Old 26th April 2005, 13:36   #11
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If you think Hyundai has problems - look at Ford, only 180 Fusions sold last month - man they got it wrong - something anything karo ! Ikon is aging - they got to move fast
Can't help but agree with you on that count. The only reason why the Ikon still sells is cause they have corrected the price to a rather sensible point. Hyundai haven't done that with the similarly aged Accent. The new Accent talk has been in the circles since 2003, but there doesn't seem to be any evidence of Hyundai working on a new Accent yet.

But otherwise, Ford have done it horribly wrong with the Fusion. Unless it had a nice TDi or CRDi under that hood, at its current price levels it will just be a slow-seller for Ford. Ford really needs to drop its prices by a good 50k atleast and then pave the way for a diesel under that hood, that can do dual duty under the Fusion and Ikon. And then just watch those sales soar! Seriously, Ford's dilemma is the lack of a good diesel for its 2 C-segment offerings, more than even an ageing lineup.

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Old 26th April 2005, 15:05   #12
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Quote:
Originally Posted by Revvmaster
The new Accent talk has been in the circles since 2003, but there doesn't seem to be any evidence of Hyundai working on a new Accent yet.
http://www.automobilemag.com/auto_sh...hyundai_accent

www.hyundaiaccent.com

www.automobilemag.com/auto_shows/ 2005_new_york/0503_hyundai_accent/

http://www.theautochannel.com/news/2...24/020209.html
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Old 26th April 2005, 15:34   #13
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Hyundai seems to be slipping in customer focus as well,

I called up advait hyundai and requested for a accent test ride.. they noted my cell no and said they will call back.. I called twice again and nobody even bothered to return the call also..

Myself and couple of other friends are hunting together for a mid-sizer and surely we will not consider accent now..

if pre-sales is like this, I dont want to think about post-sales
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Old 26th April 2005, 15:54   #14
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Quote:
Originally Posted by Revvmaster
The Getz. Another great package letdown by a higher markup. Then both car prices see revisions. But its too late. The market has already perceived them to be duds. And Hyundai's first mover advantage in the B+ segment will see Maruti as its biggest beneficiary. The Swift, scheduled for a launch next month will totally change the rules of the game. Smart looking and modern, it is like no other Maruti ever launched here. Maruti thinks it can sell 4000 of these beauties a month. Really? Yes, they just might. Maruti plans to position the base model at a lipsmacking Rs. 4 lakh. Yes, you read it right. Coupled with the proven Esteem 13BB engine and looks to die for, Maruti finally has got up to the concept of crossover, modern cars that combine practicallity and style.
If Maruti really releases the Swift at Rs. 4 lakh, they have a WINNER on their hands. Hyundai can go curl in a corner and die - unless they have the bright idea of releasing the Getz CRDi for 4.5 lakhs!

I wonder if Maruti can really release the Swift at Rs. 4 lakh, and how much they have to strip it down if they can/do?
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Old 26th April 2005, 15:58   #15
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I think Swift will be 4L for base version..

Dont expect any high shakes in the base version, probably they will have a top end variant with all the goodies loaded and I am expecting it to be aroung 4.8 L..
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