Hyundai plans to make the transition through improved customer experience

Shah Rukh Khan at Auto Expo 2018 with the portable bin
At the recent Auto Expo, Hyundai launched a portable bin that would be a part of every car rolling out of its factories from this month, as it hitched its wagon to the government’s clean-up campaign Swachh Bharat Abhiyan. While automakers are never short of CSR initiatives, for Hyundai Motor India Limited (HMIL) the “swachh can”—made in response to a survey where respondents unanimously sought cleanliness outside and within the car—is an innovation that reflects its push to reposition itself as a “modern premium brand”.

 

Puneet Anand, senior general manager and group head, marketing, HMIL, says building brand preference as well as awareness is critical for the repositioning.

 

The company’s projection as a modern premium brand has meant specific initiatives in aspects such as manufacturing and customer experience. For instance, to enhance production efficiency and quality of product, the company has installed 560 fourth generation robots on the factory floor to reduce carbon footprint by 12 per cent. According to the company, this would help in creating products for domestic and global markets. The company is also focusing on employees and vendors to improve efficiency in manufacturing. For instance, under one programme, employees are invited to share innovative ideas about “smart manufacturing process” for cost saving.

 

In terms of customer experience, apart from carrying out campaigns to enhance its brand image, the company is trying to improve its customer connect with the help of digital sales outlets—a concept started two years ago. HMIL has nine such outlets which reflect market trends. The digital sales outlet displays two-three actual cars, while customers can request for test drives via an online format. Being linked to the main dealership, the customers are able to check the actual cars and also process the contract for purchasing the vehicle.

 

The company says it has yielded benefit in terms of less lead time, high enquiry tracking, better accessibility, providing unique experience to customers and serving them in a targeted manner.

 

“We are in a process to improve our connect with millennials in India with a strong social media presence. We are the only company which has also started online booking last year,” says Anand, adding that it helps the prospective buyer to choose the car and dealership online.

 

For the average car buyer, Anand says, time is divided between home, office and car. “We are not only looking at the product but the entire relationship with the car. We want to make this third space exciting for customers.”

 

With the economy maturing, the company sees a changing consumer behaviour in India that is marked by a growing preference towards SUVs from smaller cars. With 25 per cent sales coming from SUVs last year aided by brands like Creta, HMIL plans to add models to the segment even as it banks on the likes of Elantra and Verna to keep up the excitement in compact cars.

 

“We are value seekers, and in India the price-value equation is unique. The average ticket size is probably the lowest in the world, but to win the race quality can’t be compromised,” says Anand.

 

Car sales in India clocked over 3.2 million units in 2017, with the domestic market reporting a growth of 8.85 per cent. In the passenger vehicle segment, SUVs attracted highest growth. HMIL recorded domestic sales of 5.27 lakh units with a growth of 5.4 per cent, while its contribution to Hyundai Motor Company grew to 15 per cent, as compared to 13.6 per cent in 2016.

 

While Maruti Suzuki retains a lion’s share as the market leader (49.6 per cent) in the Indian passenger vehicle space, HMIL comes second with 12.33 per cent share, according to Siam figures for 2017.

 

To stress the company’s modern premium positioning, Anand says HMIL is also focusing on electric vehicles by building capability for mass production.

 

Saurabh Jain, associate vice-president, research (equity), SMC Global Securities, points out that with Kia Motors—a sister concern of Hyundai which is set to launch in India next year—the latter is positioning itself as a more premium player with plans to relaunch brands like Santro. Jain agrees that both Maruti and HMIL are mass market companies. But while Maruti scores high in terms of affordability, after sales maintenance and second-hand market, Hyundai provides greater driving pleasure albeit with higher after sales costs. “The comfort of Hyundai cars is superior, so there is no harm in taking it up a notch for acceptance. Maruti opened Nexa, which created premium ceilings that did not cater to the mass. But Hyundai intends to give a premium appeal to every buyer through marketing initiatives.”

 

In India with the penetration of Internet buyers have become brand-conscious, moving from necessity to factors such as styling as critical. Jain explains that though cars in the range of Rs 5-6 lakh can’t be termed premium as they are meant for the middle-income population, this segment wants to pretend they are enjoying a styling associated with the premium slab. “So companies are fulfilling both needs—meeting price points and providing style.”

Making it new:

  • HMIL has installed 560 fourth generation robots on the factory floor to reduce carbon footprint by 12 per cent
  • It is trying to improve its customer connect with the help of digital sales outlets, started two years ago
  • With 25 per cent sales coming from SUVs last year aided by brands like Creta, it aims to add more models

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