Rakesh Srivastava

Let’s start with the newest product in your portfolio, the Grand i10. How has the response been?
We have already generated 224,000 enquiries and almost around 32,000 bookings within two-and-a-half months of its launch. That’s great at a time when the passenger car industry has seen a decline of almost around 4 percent. Largely, at such a time, people feel one shouldn’t make new investments. However, we believe this is the best time where investments should be made into products. That's because if you can bring in a new product, you can bring in an increased amount of interest that always acts a strong catalyst for stronger performance and sales. So we took this call to invest in this new product and roll out this product.

How do you plan to sustain the demand for the car?
Any new product can only be sustained on the strength of quality and its unique selling proposition. It should be able to offer the highest value. Only then can you sustain sales. In addition, the strength of the mother brand and the size and quality of the channel that matter. That’s because there are other manufacturers who have the size but it’s the quality that matters most. In these things, I think the Grand scores very well. As regards ‘How long will this winner last?’, the sustainability of a winner comes in from the product – the brand equity, channel strength, the USP that the product offers and, finally, the quality. So whatever we are doing now, we believe that it’ll (the Grand i10) will only go up now and will probably be in the top three brands in India. In the second month, it was already in the top five and it’s still a baby. So we are confident that it should be striking in the top three. In the first month, it sold 8,411 units, then 11,509, so it’s taking baby steps right now. There are 72 models in India and almost around 17 or 18 manufacturers. Entering the top segment in only its second month shows the strength of the Grand i10 because getting into the top five sellers list is a big challenge.

The automobile market is fast expanding into Tier 3 and even Tier 4 cities in India. How is Hyundai’s business performing in these markets?
When the industry has seen a decline, Hyundai is actually posting one of the highest market shares at around 21.3 percent, a gain of almost one percent over last year. Customers tend to look for a brand in which they find the strongest assurance. They don’t want to take any kind of risk. That’s why it has performed well even in the top 10 cities. So while the top 10 cities have actually de-grown by 11 percent, our contribution has actually increased in these from 34 to 37 percent. So we’ve actually performed better than what we were doing earlier. In other cities as well, Hyundai’s performance has been good. Where industry has seen a decline of 5 percent, we’ve grown by one percent in the other 100 cities. And our contribution has increased from 19 percent to 20 percent. That shows that Hyundai’s presence is not only limited to certain geographies. Some products appeal to farmers, rural customers – Santro, Eon, i10s – and in the top 10 cities we also have brands like the i20 and Verna that appeal to the newly rich. So we are able to appeal to diverse segments.

The automobile market is fast expanding into Tier 3 and even Tier 4 cities in India. How is Hyundai’s business performing in these markets?
When the industry has seen a decline, Hyundai is actually posting one of the highest market shares at around 21.3 percent, a gain of almost one percent over last year. Customers tend to look for a brand in which they find the strongest assurance. They don’t want to take any kind of risk. That’s why it has performed well even in the top 10 cities. So while the top 10 cities have actually de-grown by 11 percent, our contribution has actually increased in these from 34 to 37 percent. So we’ve actually performed better than what we were doing earlier. In other cities as well, Hyundai’s performance has been good. Where industry has seen a decline of 5 percent, we’ve grown by one percent in the other 100 cities. And our contribution has increased from 19 percent to 20 percent. That shows that Hyundai’s presence is not only limited to certain geographies. Some products appeal to farmers, rural customers – Santro, Eon, i10s – and in the top 10 cities we also have brands like the i20 and Verna that appeal to the newly rich. So we are able to appeal to diverse segments.

At the lower end, while it took off with a decent start, the Eon has faced some challenges, hasn’t it? Its best month was in February 2013 when it sold 10,000 units.
This is a perception that I’d like to correct. The Eon brand has, in fact, grown by 17 percent this year (2013) in terms of volumes. It is equally appealing to an urban customer while also making its presence felt in the other 100 cities. With the decline of the market, the size of this segment decreases. If you are able to post an increase in growth in a decreasing segment size, I think that shows the strength of the product. In fact, before the launch of the Grand, the Eon was our largest brand.

A product like the Eon has a lot more scope to appeal to first-time buyers like some who are yet to graduate from two-wheelers. Are you planning to do anything to make it more appealing?
Currently the entry compact segment is facing the highest stress. Here, cost of ownership is the highest USP a customer looks for since he’s moving from a two-wheeler or a used car. His aspiration levels are quite different. In such a situation, maintaining volumes itself is a challenge. That the Eon has been able to do that and grow 17 percent volume growth is great. Yes, when the market revives, the kind of volumes for the Eon we will see will be far higher.

The Sonata, at the other end of the spectrum, hasn’t really caught the fancy of customers. Why?
That segment is seeing the highest decline. The Camry, Sonata, Accord and every brand in that segment are seeing a decline with an overall decline of that segment itself, which is in the range of around 26 percent. So it’s a big challenge. That segment is largely affected by the SUVs, luxury carmakers, so there’s plenty happening above and below. Below that is the executive segment where the Elantra is the segment leader. That segment is also declining.

We will soon see Datsun rolling out the Go. How will that impact players like Hyundai?
Volumes largely depend upon the product and the unique positioning that it occupies. They are also dependent on your channel strength in terms of reach and depth, and largely also on the mother brand’s strength. So creation of volumes is a time game. You have to do many things right to gain volumes. Our experience of the last 15 years is to build the brand, create volumes, improve market share, meet customer expectations. Even one mistake and you’ve lost it. So it’s going to be a big challenge for anyone to do so because it would require a lot of expertise.

Hyundai is still absent from two key segments — the compact SUV and the compact saloon. How soon do you plan to fill that?
There is definitely room there. When you see the UV segment, its contribution is going up even in these times. It has gone up from 18 percent to 21 percent on a calendar- year basis. This segment has seen a growth of around 7.4 percent. It shows that there is room available in this segment. It does interest us and we believe we have the technical capabilities to bring in a strong product. So we are strongly looking at the segment.

Could the saloon version of the Grand fit into the compact saloon segment?
The compact saloon segment is showing very strong performance in terms of growth. It is actually growing at 20 percent, even in the current times. The contribution of that segment is strong and we believe that this growth is here to stay and it can take in a strong product intervention even for Hyundai as far as a below- 4-metre-long saloon is concerned.

What is your overall outlook in the compact car segment?
The compact segment is definitely facing a serious challenge in terms of volume pressure. But then we believe that with the economy improving, this segment, which is still very sizeable, will definitely be able to hold onto its growth rate. We are confident that we will be able to grow. One of our strengths is our strong presence in the compact segment right through brands like the Santro, Eon, i10, Grand and the i20.

What is your overall outlook in the compact car segment?
The compact segment is definitely facing a serious challenge in terms of volume pressure. But then we believe that with the economy improving, this segment, which is still very sizeable, will definitely be able to hold onto its growth rate. We are confident that we will be able to grow. One of our strengths is our strong presence in the compact segment right through brands like the Santro, Eon, i10, Grand and the i20.

Could the i10 replace the ageing Santro?
Even now the Santro sells almost 3,800 units a month. While it is a 15-year-old design, it has gone in various interventions and value additions. Even today, it still has a very strong value proposition. There are no plans of phasing out the Santro for now.

Do you feel the worst is over for the automobile market?
I think the worst is over and we are moving towards a positive trajectory. For Hyundai, this (2013) would be our highest year on two accounts – we are looking forward to posting the highest market share and also strong performance on customer expectations in terms of quality. The other is a very strong performance on part of the Grand i10 which has moved into the top five within the second month of its launch.