Hyundai India targets record 600,000-unit sales in CY23, aims to keep Tata Motors at bay
The launch of the Exter mini-SUV will enable Hyundai Motor India to scale another year of strong performance and keep its arch Indian rival Tata Motors at bay for the number two spot in the passenger vehicle segment.
Hyundai Motor India (HMIL), which has entered the entry-level SUV market with its latest product – the Exter mini-SUV – is eyeing record volumes in CY2023. Bullish on demand to come the Exter’s way, the Chennai-based car and SUV OEM is targeting domestic market sales of close to 600,000 units by end-December 2023.
This would translate into 8.60 percent year-on-year (YoY) growth over its CY2022 sales of 552,511 units when it clocked 9 percent YoY growth (CY2021: 505,033 units). HMIL's targeted 8% growth is a little better than expected industry growth of 5-7% in FY24, on account of a high year-ago base.
With this new target, Hyundai Motor India is confident of maintaining its long-standing No. 2 position ahead of a hard-charging Tata Motors, which, in CY2022, was 25,713 units. The battle between the two carmakers continues in CY2023 – HMIL has despatched 296,010 units between January and June, and is 19,906 units ahead of Tata Motors’ sales of 276,104 passenger vehicles.
"We are the only PV manufacturer in the top three which has registered double-digit uptick in H1 CY2023. I think it is reasonable to expect something closer in the range of 595,000 to 600,000 units by end-CY2023 from HMIL. We are fully confident that CY2023 will be our best-ever, and highest-ever sales performance year," said Tarun Garg, Chief Operating Officer, Hyundai Motor India, in a media interaction in New Delhi.
"The supply constraints are almost over, and waiting periods have come down to around 2-3 months, even for extremely-popular models like the Creta diesel. This clearly indicates that the pent-up demand is over, and now, it is all about creating as well as meeting new demand every month. Having said that, there continue to be headwinds in terms of high interest rates, and fears of global recession affecting the mood of the buyer in India,” he added on a cautionary note.
To achieve its sales target, HMIL has augmented its manufacturing capacity at its plant in Sriperumbudur, Chennai by 50,000 units, which expands its total annual capacity to 825,000 units starting July 2023. In May this year, the Korean carmaker had announced plans to ramp up plant capacity to up to 850,000 units.
Looking to punch the compact SUV market with Exter
Hyundai’s aggressive growth strategy for FY2024 kicks off with the Exter. It is confident that the mini-SUV, which squarely targets India’s third best-selling compact SUV – the Tata Punch (after the Tata Nexon and Maruti Brezza) – will strengthen its sub-Rs 10 lakh portfolio. "Our model mix is becoming very broad with almost 50 percent of our portfolio comprising cars priced at over Rs 10 lakh. The Exter will strengthen our sub-Rs 10 lakh price range as well," Garg said.
With the Exter, which joins sibling Venue in the small SUV segment, Hyundai has signalled a mission to grab a bigger portion of India’s compact SUV market which in April-May 2023, at 185,020 units, comprised 51 percent of total UV sales of 363,563 units.
While the Tata Punch has sold over 200,000 units and counting since its launch barely 20 months ago, HMIL believes that the Exter could double the entry-SUV segment, and grow monthly volumes to up to 20,000 units within the next 18 months.
With its SUV range, which, with the launch of the Exter, now forms almost 60 percent of Hyundai’s India's ten-model portfolio, the carmaker is optimistic about its ability to cater to the burgeoning demand for SUVs. "This puts us in an extremely strong position to cater to the addressable market, which is tilted towards SUVs that comprised 46 percent of the total PV sales in India in FY2023," said Garg.
"With the Creta, Tucson and Verna clinching the numner one spot in their respective segments, we have attained leadership positions in three prestigious segments. With this confidence, we are now foraying into a completely new segment with the Exter.
"While I do not know what volumes we will hit with the Exter, I am confident that it will add a lot of new customers in the entry-level SUV segment. We are certain that Exter will raise the benchmark in various aspects. It will appeal to a wide range of not only existing SUV buyers, but a large set of hatchback customers as well," he added.
“With strong macro-economic factors, the demand is strong, and with the festive season on the anvil, we are hopeful of continuing our strong performance. Having said that, with the pent-up demand almost over, we must now rely on new orders,” Garg explained.
Prioritising domestic market sales over exports
Hyundai Motor India, which used to be India’s number one PV exporter until FY2021, has lost its position to market leader Maruti Suzuki India, which has held onto the export leader title for two years in a row and has had a strong lead in the first three months of FY2024.
For the Korean carmaker, the limited capacity at its sole plant in Sriperumbudur is a key reason why it continues to prioritise supplies to the local market, where demand has become stronger, particularly after the launch of the second-generation Creta in March 2020.
“The domestic market is a clear priority for us. Now that we have extra capacity with the expansion to up to 850,000 units giving us more room, it is a balance between making sure that our domestic obligations are met. Having said that, the exports of Made-in-India products are equally important to get foreign exchange. At Hyundai, right from day one, we have struck a balance between domestic and export sales, and we will continue to maintain it going forward,” pointed out Garg.
“We have taken ‘Make-in-India’ very seriously, and our mega-Rs 20,000 crore investment in a local battery plant in Tamil Nadu is a testament to that,” Garg stated. With capacity at its sole Chennai plant being stretched to its limits, the company is now gearing up for future growth by eyeing a new plant. In March this year, HMIL signed a binding term sheet to acquire General Motors’ vacant plant in Talegaon, Pune. The company is working towards it and says it will announce its subsequent plans very soon.
Bullish about diesel in the near term
With tightening emission norms bringing a strong shift in the Indian passenger vehicle market, which is increasingly moving towards petrol, hybrid, electric, and bi-fuel CNG technology, Hyundai Motor India remains one of the few manufacturers to offer diesel engine options in its portfolio. At present, diesel contributes 20 percent to HMIL’s overall sales, with the share of the fuel in its top-selling Creta SUV pegged at 45%. “In the Alcazar, still it is 60%, and in the Tucson, it is as high as 70%,” revealed Garg.
“Obviously, diesel demand will come down in the future, but it continues to remain strong, particularly for midsize and big SUVs, where customer demand is more towards diesel from a better fuel efficiency and drivability perspectives,” he added.
“While it (diesel demand) is going strong, and it helps us meet our corporate average fuel efficiency or CAFE targets, if we see the overall numbers, certainly diesel is coming down. Having said that, there is big demand still for diesel, and we expect diesel demand in these segments to continue strongly for the next 2-3 years,” affirmed Garg.
Like its arch-rival Tata Motors, Hyundai too offers multi-powertrain options ranging from petrol, turbo-petrol, diesel, and CNG through to electric vehicles, along with a plethora of drivetrain choices with manual, AMT, clutchless manual transmission, CVT, and DCT.
“India is a big market with diverse customer requirements. We are among the few manufacturers which have an all-encompassing powertrain portfolio that spans petrol, turbo-petrol, diesel, CNG, as well as electric. The sales of the turbo-petrol-DCT combination in the Verna are close to 20 percent, while around 25-30% of volumes of the Venue are from the turbo-petrol variants. The demand is heavily skewed towards DCT in the Venue, with the N-Line trims commanding as much as 80 percent volumes from DCT-equipped variants,” concluded Garg.
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