Hyundai Motor, once the undisputed No.2 in India's fast-growing car market, has seen its market position under seige from resurgent rivals Mahindra & Mahindra, and Tata Motors. Can it see off the competition, and successfully defend its turf?
21 May 2025 | 931 Views | By Ketan Thakkar and Kiran Murali
Almost since its entry into India, Hyundai has held on to its status as the second largest car maker in the country. However, its No.2 status has come increasingly under threat in recent months, with the last three seeing the once invincible brand relegated to the No.4 position by resurgent ...
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Almost since its entry into India, Hyundai has held on to its status as the second largest car maker in the country. However, its No.2 status has come increasingly under threat in recent months, with the last three seeing the once invincible brand relegated to the No.4 position by resurgent rivals Mahindra & Mahindra and Tata Motors. The company reported a 2.6% decline in domestic shipments in FY25 at 5.99 lakh units, in line with a slide in retail sales.
However, the South Korean brand is in no mood to take it lying down, and is plotting a return to the podium with a revamped, multi-powertrain strategy encompassing hybrid, CNG and electric platforms in addition to petrol and diesel. Hyundai may soon emerge as the only one among India’s top 4 car OEM to offer the full spectrum of powertrains. "Our strategy is clear: no single technology can address all segments," announced Tarun Garg, Chief Operating Officer, Hyundai Motor India, during the company’s earnings call in May. It views each of these technologies as pillars of future growth, and has distinct strategies for each of them.
Hyundai's CNG strategy is proving a cornerstone in the sub-₹11 lakh segment, where affordability and fuel efficiency are paramount. Models like the Aura, Grand i10 Nios, and Exter have gained traction, bolstered by Hyundai's dual-cylinder CNG technology, which enhances boot space and usability. CNG penetration in these models climbed to 40.7% in FY25 from 35.7% in FY24, reflecting strong demand in a segment where CNG vehicles now account for 18% of total PV sales (SIAM). "CNG is a compelling option for the sub-₹11 lakh segment. Dual-cylinder technology has driven penetration higher," Garg noted. This positions Hyundai ahead of competitors like Maruti Suzuki, which dominates the CNG space with a 70% share but faces growing pressure from Hyundai's feature-rich offerings.
Diesel powertrains remain a key growth engine for Hyundai's SUV lineup. While the overall market share for diesel passenger vehicles is declining, it continues to represent a substantial portion of SUV demand. Maruti Suzuki's 2020 exit from the diesel segment has allowed Hyundai to capitalize on this demand with its strong SUV offerings.
The Creta remains a standout performer in the SUV segment. With 1.45 lakh units sold in FY25 (up 12% YoY), Creta has topped the mid-SUV segment for two consecutive months, driven by its petrol, diesel, and electric powertrain options.
“Creta, over the last two months, has been the number one model. I think one reason has been the presence of all three fuel types – diesel, petrol and electric,” Garg said. “So if you see the Indian landscape, some OEMs probably have capability in EV, some OEMs have capability in hybrid, some are very strong in CNG, some have petrol, some have diesel. At Hyundai Motor Group, the advantage is that we have access to all technologies.”
Hyundai's SUV portfolio, including Venue, Alcazar, and Tucson, faces stiff competition from Tata Motors (14.5% PV market share), Mahindra & Mahindra (10.8%), and Kia India (6.2%). Yet, Hyundai's ability to offer diverse powertrains gives it an edge in a segment that is projected to grow at a CAGR of 10% through 2030 as per ICRA.
After initially resisting the idea of launching hybrid models in the country, the Korean brand seems to have finally come round to the view that such models will have a role to play in India after all. Hyundai has finally given the green light to the introduction of hybrid models in
India, targeting the mid-to-premium segments where hybrids are expected to reach a penetration of 10% by 2030, up from 2% now.
With this, Hyundai will join its competitors like Toyota (Innova Hycross, Urban Cruiser Hyryder) and Maruti Suzuki (Grand Vitara). These models are likely to complement its ambitious 26-product ICE+EV pipeline for India.
Among the first models to also come in hybrid avatars are likely to be the next-generation Creta, codenamed SX3, and an all-new three-row SUV, codenamed Ni1i. Expected to hit the roads within the next two years, these two mid-size SUVs are poised to reinforce Hyundai’s position in the fast-growing premium SUV segment and are likely to offer a stiff challenge to segment rivals like Maruti Suzuki and Toyota, who have already made significant strides in hybrid offerings. However, Garg remained non-committal on launching plug-in hybrids and hydrogen fuel cell vehicles, despite such models finding a place in Hyundai’s line-ups in other markets.
However, analysts believe that the success of hybrids will depend on the direction that policy making will take in India. "Hyundai is ready for all powertrains, including hybrids. However, total cost of ownership (TCO) is better for EVs compared to hybrids today,” pointed out Raghunandan NL, director of Research at Nuvama Institutional Equities. “Hybridization in India's passenger vehicle market will depend on government support in terms of tax benefits or subsidies," he added.
Hyundai's EV strategy is anchored by Creta Electric (Rs18.99-22.25 lakh) introduced in January, with the Ioniq 5 (priced at ₹44.95 lakh) offering an option for a premium ride. The company’s EV sales jumped 65% in FY25 to 8,200 units.
Hyundai has now turned its eyes to the sub-Creta segment, where affordable EVs could challenge Tata Motors' Punch EV. India's EV market, currently at 2.5% penetration (FY25), is projected to hit 15% by 2030, driven by government incentives and falling battery costs. "We see opportunities in the Creta-minus segment. Our EV penetration will outpace the industry by 2030," Garg asserted.
"Hyundai's focus on localisation (95% for ICE, 60% for EVs) mitigates some risks, unlike MG Motor and BYD, which rely heavily on Chinese imports. However, China has recently imposed stringent controls over the export of rare earth minerals, used in the manufacture of EV motors. "It's premature to comment. We'll update as we gain clarity.
Hyundai's multi-powertrain approach sets it apart in a market where Maruti Suzuki (40% share) leans heavily on CNG and hybrids, Tata Motors dominates EVs, and Toyota and Suzuki push hybrids.
With Rs 24,000 crore invested in India over the past five years, Hyundai is bolstering its Chennai plant (8.2 lakh units capacity) and Talegaon facility (2.5 lakh units by 2028) to support its eight new models by FY27, including hybrids and compact EVs.
However, the Korean brand has seen a significant contraction in its market presence in India, dropping from its traditional 16-17% share to 14.6% in FY24 and 13.9% in FY25. More recently, Hyundai has come fourth in retail sales for three months in a row in 2025 - February, March and April.
The slippage can be seen in the context of regulatory and market changes that dulled the edge of Hyundai’s competitive strategy. The Korean brand quickly rose to be India’s undisputed No.2 car brand by differentiating itself against market leader Maruti Suzuki. It made sure to offer vehicles that were not only more stylish than those of the market leader, but also offered segment-first features that set industry benchmarks—all without burning a hole in the consumer’s pocket.
VG Ramakrishnan, managing partner at Avanteum Advisors, points out that Hyundai’s growth has been impacted by a confluence of factors. "Three major market transformations and three new competitive threats have stymied Hyundai's growth," he notes.
The first is the evolution of the market. "Many features [that used to set Hyundai apart] have become standard due to regulatory changes—like airbags. And competitors have upped their feature package. There is no significant WOW factor [to Hyundai models] anymore," he noted.
Secondly, the market shifted from hatchbacks and sedans to SUVs, and Hyundai found itself outpaced by Mahindra, which was better positioned to ride the SUV wave. On the EV front, Tata Motors seized the pole position, while Hyundai hesitated.
Adding to Hyundai's challenges is an overall intensification of competitive intensity across the board. "All OEMs, particularly Tata and Mahindra, have upped their design and build quality," says Ramakrishnan. He points to the Toyota-Suzuki alliance as another disruptive force, while Kia—Hyundai's own sister brand—has emerged as a direct rival in several segments.
Beyond external headwinds, Hyundai's recent struggles are also rooted in internal missteps. The company has been inward-looking over the past 2–3 years, with its anticipated IPO likely becoming a major distraction for the organisation.
Several product misfires have compounded the issue—most notably the Alcazar, which was positioned as a three-row SUV but failed to meet consumer expectations on space and utility. Hyundai also miscalculated its premium pricing strategy in certain segments, which hasn't resonated with value-conscious Indian buyers.
Additionally, the company has been slow to adapt to shifting design preferences in the market, where rugged and boxier SUVs are gaining popularity over curvier, coupe-inspired silhouettes. As Ramakrishnan puts it, "Hyundai's reputation of being the trendsetter has been dulled in the last few years."
To regain its edge, Hyundai now needs to recalibrate across powertrains, product strategy, and design alignment with India's evolving tastes. With its traditional advantages eroding and consumer preferences rapidly evolving, the company must diversify its powertrain strategy to remain competitive. "Hybrid will become mainline," says Ramakrishnan, emphasizing the growing relevance of hybrids in India's price- and efficiency-sensitive market.
He added, "Diesel may make a comeback," particularly in torque-heavy or high-mileage use cases. For Hyundai, a flexible, multi-powertrain approach—including EVs, hybrids, ICE, and diesel—may be the most pragmatic path to regain lost ground and future-proof its portfolio.
Nuvama's Raghunandan also does not believe that the brand is ready to walk into the sunset yet ."The aggressive model pipeline should support volume improvement and premiumization over the medium term. By FY27, there are eight models being launched, which should drive volume improvement, premiumization, and market share sustenance/gains," he said.
With CNG for entry-level buyers, hybrids under evaluation for premium segments, and a phased EV rollout underway, Hyundai is getting ready to regain its lost market share and reinforce its position as the country's No. 2 PV maker.