[aaggoswami]

1) Hyundai has initially created a Maruti sort of image. They are seen now as budget car maker. They were good in days when Maurti 800 was called the car for the masses. Now its one level up. i10 was not there and hence Hyundai because of its santro gathered the image of budget car maker. Also Hyundai never that that niche image that original Zen had. Zen managed less sales later on, but its name remained.
This was one thing that is now playing a big role in Hyundai's sales.

2) If anything that can pull up Hyundai its diesel. Take out diesel out of I20, Verna and Getz and under Rs. 10 lakh, Hyundai will have only two good sellers as GTO has mentioned.
Similar is situation with maruti. They need good diesels to survive. The segment above Rs. 10 lakh prove the point of image being the main culprit for low sales of Sonata.

3) Now comes the real point. Hyundai India is making reasonable amount of numbers from India because of exports. And the exports are mainly from I20 and I10. I20's base is also planned to be shifted from India to Europe. This would significantly bring the numbers down for Hyundai India. The root cause of worry. As soon as Tata motors becomes no.2, they will definitely have an image advantage and dealers will make full use of this.

4) Any car above Rs. 10 lakh is right now not required by Hyundai India neither do they need SUV/MUV. They must concentrate on what they have at hand. They are yet to utilize I20 perfectly. I20 is a good overall hatch as compared to others in that segment. Hyundai has a good product that they are not able to realize. A good diesel is the main advantage. They must be able to fend off the competition from Fiat and Skoda. Honda has image advantage.
I20 can play a big role if Hyundai does some aggressive marketing like they did for Santro. Not getting down to level they did with Santro, but with similar intensity.
Next, a diesel i10.
These two things are the best Hyundai India can do thanks to an image hampering the good products.

[GTO]

Originally Posted by sanagg1

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

Car manufacturers can (and do) find a whole lot of answers on Team-BHP.

Originally Posted by notjustshrawan

Small Diesels - I believe there is a 1.2-liter diesel engine for the i10 lined up for next year.

The key question is : WHY so late? They've so obviously missed the boat. The market has changed since '99, and Hyundai simply hasn't been on top of it. Sure, they offered very relevant products 7 - 8 years back. But when the market moved to diesels, even a stubborn Maruti went around and set up a diesel engine plant in collaboration with Fiat.

How can you be the no.2 and wait so long to react? If BVR Subbu were around, you'd be seeing diesel Santros and i10s giving a clean fight to Maruti in 2007, if not 2005!

Have you taken a look at the gorgeous Hyundai i40/Sonata YF testing in other parts of the world?

I've seen and driven the competent Hyundai Sonata Transform. Great sedan, but lets face it....neither Hyundai or their dealers have done anything to market it. You'd think they do NOT want to sell the car at all. Poor marketing, positioning, ill equipped dealers..the list goes on.

The all-new Tucson is getting ready to battle against the existing crop comprising of the Chevy Captiva and Ford Endeavour.

My comments in relevance to the new Tucson stay identical, as for the Sonata Transform. The old Tucson was also a competent soft-roader. Just poorly handled.

Originally Posted by esteem_lover

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.

Originally Posted by appuchan

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

If this is true, Hyundais probably making a noise to get the Indian government into granting them benefits?

[FlyingSpur]

Originally Posted by GTO

...a perfectly positioned 10 - 12 lakh sedan, an MUV and a 15 - 20 lakh SUV?

At the risk of sounding like an outright pessimist, who's going to buy any of the above from them?

Maybe not the over-priced Tucson (20L OTR Mumbai? Please!), but a Sonata, yes. I would. But I hardly know anyone else who would too.

[Zappo]

If I understood it correctly the issue here is not that the labor cost in Korea being lower than that in India. Rather, what they are saying is that the FTA (Free Trade Agreement) between Korea and Europe will make it possible for the Koreans to export to Europe without paying the 10% import duty. Obviously the Indian companies will keep paying that duty. This is what threatens Hyundia India IMO.

The problem as I see it here is that Hyundai acts pricey with their cars. They are simply overpriced. Whether its a Getz, Verna or now the i20 they have always priced themselves at a premium above the market. Now, in such a scenario, with the 10% duty reduction for those exporting from Korea the Indian arm probably finds itself too closely priced to their Korean prices. The solution here lies in Hyundai India reducing its profit margin a little as I am pretty sure that even with that 10% duty reduction for the Koreans Hyundai will find itself far ahead just if they right-price their products rather than overprice them as they currently do.

[madan80]

Outside of South Korea, this is Hyundai's largest manufacturing plant. Being the company that it is, I dont think we are going to see this competition actually happening. Incase there is an FTA between Seoul and Europe happening, we might see the production lines in India feeding markets in other parts of the world. Or we might just see the FTA between New Delhi and Seoul being used to channel cars to Europe through Seoul.

As for Hyundai's market position - They have positioned themselves in all price brackets, however, the image of Hyundai = Santro is quite difficult to break, and this is what has rubbed off on all the other vehicles.

No matter what marketing is done, Hyundai is seen as the santro company and that would mean why would someone pay 10+ Lacs for an expensive santro. As auto enthusiasts we know the difference between the cars.

I remember when I was looking at an i10 - the sales guy was telling me how different the i10 was from the Santro - rather than how different it was from say the WagonR or Indica.

[mohandas]

Sir,
With due respect, anyone, who reads the export section of ET regularly, can draw such inference. You can do that too.

To GTO:
Please don't take this personally. I have NO INTENTION to show you down. If my statement makes you feel so, please accept my apology.

Originally Posted by sanagg1

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

[appuchan]

Originally Posted by GTO

...

If this is true, Hyundais probably making a noise to get the Indian government into granting them benefits?

Exactly. That is what everybody is doing, right? What did the airlines did a few days back? What are bank employees doing next week? Its a sad thing that only crying babies get milk or at least a promise that "we will look into the matter"...

A good government should be proactive and sensitive to what is happening around them.

Originally Posted by Zappo

If I understood it correctly the issue here is not that the labor cost in Korea being lower than that in India. Rather, ...
...

Absolutely not. Labor cost in S. Korea is at least 2.5 times more than here. And it will be even higher for low level or unskilled labor. Note that it is a developed country with the highest penetration of internet, highest average internet bandwidth and mobile internet, with most people carrying a large amount of gadgets around their waist.

Note from the Team-BHP Support Team : Please use the "edit" button if posting within 20 minutes of the first post, instead of creating another back-to-back post.
Also use "Multi Quote" option for quoting Multiple posts.

[kcstheg]

One thing we might want to consider while talking about labour costs for these automotive manufacturers - The amount of automation in their korean and japanese plants is much much higher than those in india.

If it takes 25% of the people to produce N cars in Korea when compared to India, the 250% higher labour costs are more than offset.

It is very true that Hyundai has not been doing enough to keep up with the market here in india. Their diesel hatches are priced much higher than the cars their petrol counterparts complete with. Their SUVs have been prohibitively over-priced and under sold to keep the volumes up.

IMO, their products, in general, are quite good and relevant to the segments they sell in, but thats not enough to keep them at their position in the market.

[greenhorn]

India is going to sign an FTA with korea this week right?

I wonder what the implications of that are ....

[srishiva]

When a small budget maker tries to go bigger, they need to have a very good (looking) car which is also priced lower. Hyundai's Elantra and Sonata were not the right ones. They fail and the car maker is stuck with small car maker tag.
By the time they up their ante Honda and other big car makers of repute had cars which looked good and cost a little more. Why would anyone buy a Hyndai.

If Honda or Toyota could offer what Hyndai offers with a 50K premium in small cars, you can again see people going away from Hyundais.

[devarshi84]

This situtation has not cropped up in a day. It's been long in the making and the management at Hyundai India has the through knowledge of the subject.

Some steps should already be in progress. But looking at the scenario its easy to guess that Hyundai's reign as the no.2 maker are almost over unless they have a card or two up its sleeve which turns out to be an ace.

Tata motors has been too agressive lately with its new products and though slow to gain favour the vista and sumo grande has made their inroads.

Also to point out, the last few releases from hyundai have been less value for money. verna at 7.5 lacs and i20 at 6-7 (not counting the 1.2 as a premium hatch) lacs is not what people expect from hyundai. This means 2 things. Lots of money for hyundai as these cars were not exactly flops and a potential to raise sales by reducing market prices.

[Zappo]

Originally Posted by appuchan

Absolutely not. Labor cost in S. Korea is at least 2.5 times more than here. And it will be even higher for low level or unskilled labor. Note that it is a developed country with the highest penetration of internet, highest average internet bandwidth and mobile internet, with most people carrying a large amount of gadgets around their waist.

So essentially you are agreeing with me that labor cost is not the problem here. India's labor cost is definitely much lower than Korea's.

The question then arises why is Hyundai india so worried? As I said, it is probably because with their penchant to price their cars at a big premium they may find that Korean FTA with Europe actually brings the Korean prices a little too close to the Indian export prices for Hyundai India's comfort levels.

Just take a simple example. Now this may not be an exhaustive one but is a fair indicator of things. i10 is being manufactured and exported to the rest of the world from India. So essentially any i10 you buy anywhere is probably Indian made, right? Now check the UK prices. I just did. The base i10 there costs GBP 7200. At today's exchange rates thats well over Rs. 5,82,000. Check the price of the i10 Asta here (the topmost and the costliest version). Its around Rs.4,80,000. The UK version comes with 4 airbags while the Indian top version Asta has 2 airbags. But thats about it. Asta has lot of creature comforts that are missing in the base i10 sold in UK. And still its priced that high.

Now, a i10 with similar features as Asta costs GBP 8300. You can do the arithmatic. With the cars priced so high I believe a similar Korean made car with a 10% price drop may actually come a little too close to this pricing. And hence my argument that Hyundai India needs to price the cars a little more competitively rather than just crib about the impending FTA effects.

[Thomas8700]

hyundai has set its sight not just in india but all over the world.

just wait till the actual festivities start

[ahuja365]

It would only be for sometime as india and eu are also working on their fta,so if our babus work faster then hyundai would have no problem.

[Minardi]

Hyundai will now have to abandon its 'premium' positioning vis-a-vis Maruti. It will have to sell more i10s and i20s, so expect it to price them more sensibly. This will indirectly hit Fiat, who also will have to sell cheaper to compensate for their image problems. But the Indian consumers will gain