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Old 5th August 2009, 14:48   #1
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Default Hyundai India worried. Very worried (Euro trade pact)

Strange as the situation may be, Hyundai India is worried of competition from Hyundai Korea! An upcoming free trade agreement between Europe & South Korea would make it impossible for Hyundai India to compete on costs (10% duty applicable).

Fact : Hyundai India exports 50% of the cars it makes here, a majority of Europe (primarily the i10 & i20). Expect some hard core lobbying in New Delhi for additional benefits. Question is : Can the government extend benefits only to Hyundai? Obviously not, Maruti & others would be next in line. Would the government extend tax benefits for exports only to Europe? Dicey situation, as other non-automotive industry players would que up too.

On a related note, Hyundai needs to step up on the gas WRT its Indian operations. The only two Hyundai's bringing in the volumes are the (decade old) Santro & the i10. The Accent is too old to compete, the Verna is steadily losing favour and the i20 is not a volumes player. Hyundai has a long string of market failures too - The Getz, Elantra, Sonata, Tucson and Terracan. Can a No.2 player fight on the basis of only two best seller products? I mean, Tata is only 1.6 market share points behind and has the Nano, Indigo Vista and an Xylo-beater lined up!

Where are the small diesels (Santro & i10), a perfectly positioned 10 - 12 lakh sedan, an MUV and a 15 - 20 lakh SUV?

Source : Reuters India and Economic Times
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Old 5th August 2009, 15:03   #2
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Originally Posted by GTO View Post
Strange as the situation may be, Hyundai India is worried of competition from Hyundai Korea! An upcoming free trade agreement between Europe & South Korea would make it impossible for Hyundai India to compete on costs (10% duty applicable).

Where are the small diesels (Santro & i10), a perfectly positioned 10 - 12 lakh sedan, an MUV and a 15 - 20 lakh SUV?
Very well said. GTO
are you having a career in auto advisory / consultanat market ? If not soon you may find one as a part time.
If you can see the market targeting in India so clearly why can't these auto companies spending huge amount of money on market R&D couldn't.
cheers
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Old 5th August 2009, 15:27   #3
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Where are the small diesels (Santro & i10), a perfectly positioned 10 - 12 lakh sedan, an MUV and a 15 - 20 lakh SUV?
Small Diesels - I believe there is a 1.2-liter diesel engine for the i10 lined up for next year. This engine will compliment the 1.1-liter CRDI. Hyundai will roll out this engine from its new local engine plant hopefully before end of 2011.

Perfectly positioned 10-12 lakh sedan
- I think the Avante could arrive in India by next year to fill this slot. The i30 cw is not a bad idea either, but given the hatred towards station wagons in India, Hyundai will think two or even 200 times before signing on the dotted line.

Perfectly positioned 15-20 lakh sedan - Have you taken a look at the gorgeous Hyundai i40/Sonata YF testing in other parts of the world? It is destined for India according to several reports as a replacement to the Sonata.

15-20 lakh SUV
- The all-new Tucson is getting ready to battle against the existing crop comprising of the Chevy Captiva and Ford Endeavour. With styling cues of "i" cars, this would be the hottest SUV in the Indian market once released. Just like how the i20 has created this craze among Indians, the Tucson I believe, will replicate a similar effect.

Sub 3-lakh rupee car
- The Hyundai GB. It's coming out of Hyundai's plant next year to take on the likes of the Spark and Alto in both diesel and petrol formats. Two petrol engines are reportedly being developed - 800cc and 1-liter engines for emerging markets as the company's entry level car.

Last edited by notjustshrawan : 5th August 2009 at 15:31.
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Old 5th August 2009, 16:05   #4
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Will anybody buy a 15L suv or a sedan more than 12L from Hyundai.
Look at the Sonata Transform. With its crdi engine, its currently the most VFM premium sedan in the market. Yet nobody wants to buy it.
Hyundai India will need to increase their India sales to compensate for the loss of Europe business, and this increase will have to come from the small car segment
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Old 5th August 2009, 16:14   #5
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I will keep my fingers crossed on the cost of production factor. I know for a fact that it is very low in India compared to South Korea.
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Old 5th August 2009, 16:14   #6
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Will anybody buy a 15L suv or a sedan more than 12L from Hyundai.
Look at the Sonata Transform. With its crdi engine, its currently the most VFM premium sedan in the market. Yet nobody wants to buy it.
Hyundai India will need to increase their India sales to compensate for the loss of Europe business, and this increase will have to come from the small car segment
this is the exact same reason why Hyundai is looking at a diesel option for the Santro apart from the i10, and the upcoming small car, which will itself have two petrol engines.

If Hyundai manufactures the diesel engine for the i20 locally, it will be upto 15% cheaper, which will give it a much-needed competitive edge. Hyundai need the new Tucson and i40 to plant a storm in India. These are new products which will bring a lot of change along with it.

And in my opinion, Hyundai can try and do something about the Innova-Xylo rampage. I have not yet analysed their international product line-up, but I remember seeing something called the Trajet which looked suitable for the job.
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Old 5th August 2009, 16:20   #7
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The i20 production is already being moved to Europe. Source. I'm surprised that despite the FTA Hyundai is increasing production and hiring more people for its Chennai plant. This production increase is apparently for the overseas market. Now which market would this be? Hyundai to up production by 20 pc; will hire 1,000 people- Automobiles-Auto-News By Industry-News-The Economic Times

I think Hyundai India is being clobbered by Maruti's(Suzuki) strategy of launching multiple small cars in the Sub 5 Lakh segment. Currently Hyundai doesn't have any answer to the long list of choices that Maruti gives to the customer except perhaps the i10 and Santro. I agree with GTO, Hyundai needs to wake up soon and smell the coffee or whatever else they have in the morning in Korea.
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Old 5th August 2009, 16:52   #8
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As mentioned before, Hyundai should use its Diesel expertise to increase its market share. Both its main volume rivals Maruti and Tata have cost competitive Diesel small cars. Its high time Hyundai starts making small diesel engines in India. Once their diesel range is priced more sensibly the volumes will start coming in.
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Old 5th August 2009, 17:08   #9
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Quote:
Originally Posted by tsk1979 View Post
Will anybody buy a 15L suv or a sedan more than 12L from Hyundai.
Look at the Sonata Transform. With its crdi engine, its currently the most VFM premium sedan in the market. Yet nobody wants to buy it.
Hyundai India will need to increase their India sales to compensate for the loss of Europe business, and this increase will have to come from the small car segment
Most hyundai dealers are not equipped to sell a sonata,2 months back we were looking for a sonata diesel automatic for my uncle,3 dealers in gurgaon and hyundai motor plaza in Delhi were not able to provide us a test drive for automatic for a month,we cancelled the car.

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Old 5th August 2009, 17:30   #10
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Why would South Korea be cheaper than India when it comes manufacturing costs? Why would they be able to export at lower costs than us? I understand that most of costs in car manufacturing are going into the components. But even then, there is a substantial amount of labor cost as well, which I am sure S Korea cannot match. Mention of just 2-3% cost advantage in labor costs cannot be digested. Also Hyundai don't have to pay import duty for making cars that are exported. I think its just a media hype to press for more benefits from government.

And finally, dont Japan already has a free trade agreement with Europe and US? Did that change anything here? Labour costs there are prohibitive and currency rates are even more problematic. And what about European and American cars we make here?

Disclaimer: I have worked in S Korea and hence I know how expensive labor is there. It is not very different from Japan.

Last edited by appuchan : 5th August 2009 at 17:35.
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Old 5th August 2009, 17:30   #11
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Most hyundai dealers are not equipped to sell a sonata,2 months back we were looking for a sonata diesel automatic,3 dealers in gurgaon and hyundai motor plaza in Delhi were not able to provide us a test drive for automatic,we cancelled the car.
+1 to that.

A week back, I've requested for a Sonata Transform CRDi AT test drive the second time in last 2 months. This time I've even told them to bring the manual version if AT TD car is not available. Still no sign of the car of follow up's.

They just seem to be content with their small cars.
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Old 5th August 2009, 17:37   #12
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Hyundai India should hasten the development of their sub-i10 small car.Launch it ASAP.With a diesel.
A replacement for the Verna is impending.The recently launched fugly Verna Transform is loaded with features but it won't find many takers simply because of the way it looks.The best bet is to rebadge the Kia Forte as the Verna.
The SantaFe and the new Accord beater is coming.But these cars will not generate the numbers that Hyundai needs.It needs small diesels and more compact cars.Also a MPV,if good will sell like hot cakes,given the market's need for these kind of cars
Another ploy is to introduce the KIA brand in India.
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Old 5th August 2009, 17:46   #13
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+1 to that.

A week back, I've requested for a Sonata Transform CRDi AT test drive the second time in last 2 months. This time I've even told them to bring the manual version if AT TD car is not available. Still no sign of the car of follow up's.

They just seem to be content with their small cars.
I was told by a manager at a dealership in gurgaon that they have been told to concentrate on small cars.
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Old 5th August 2009, 17:46   #14
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And finally, dont Japan already has a free trade agreement with Europe and US?
No. bilaterals.org | Japan FTAs
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Old 5th August 2009, 17:49   #15
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Off topic, is Hyundai launching the new Santro soon ? I see the advt in Today's Bangalore TOI that offer price of Santro 2.99 Lakhs (12 years old price) till 12th July. Is it like stock Clarence offer before the new model launch ?
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