It is our dream to sell a million units annually: Hyundai Motor India MD

Y K Koo, Managing director and chief executive officer at Hyundai Motor India
Korean auto major Hyundai has strongly held on to its second position in India, the world's fifth-largest car market. The company is operating at full capacity and is yet to decide on capacity addition. Hyundai Motor India Managing Director & Chief Executive Officer Y K Koo tells Ajay Modi that it is his dream to sell a million units annually and the company will have to look at a new plant by 2020 to augment capacity and meet the growing demand. Excerpts of an interaction:

As the second-largest car maker, what growth triggers do you see in the Indian market?

The market is growing fast. GDP growth of 7- 8 per cent is also higher than most countries. Every factor here is positive in comparison to advanced countries such as China, Russia and Brazil. It is a very good signal. GST has lead to simple taxation and the industry will benefit from it. Initially, some correction can be seen as traders are not too confident now and July was tough for retail car sales. But things will pick up and the market will rebound in the October-December quarter. For the whole year, the industry should grow at about eight per cent.

Hyundai is strong in compact and SUV segment. What product gaps do you wish to fill?

We will invest Rs 5,000 crore to introduce eight models (including full model changes) over the next four years. The new Xcent has been launched to target the personal segment which is gaining popularity. We will bring the new Verna in August with a lot of changes in design and better segment features. In the second half of next year, we will bring a new compact family car, positioned between Eon and Grandi10. In the first half of 2019, we will bring a compact SUV.

Will this family car be named the Santro?

Santro is still a very powerful brand. It has an emotional connect with many buyers here as it was the first car for many Indians. We have not finalised the name but the Santro name is very important.

Hyundai, the biggest exporter for a long time, is seeing a decline in shipments?

The domestic market is growing fast and export markets like the Middle East and Latin America are slow. We converted volumes from export to domestic. Fortunately, the export demand is not strong.

Hyundai’s top two global markets- China and US - are not growing. How important has India becomes in the situation?

India is the third largest market after China and US. In 2016, India contributed 13.6 per cent of Hyundai’s sales. However, in the first half of 2017 our contribution is 14.5 per cent. We have increased our share and we should continue the momentum. Our three products-Grandi10, i20 and Creta have done cumulative sales of 1.25 million units and remain strong.

When will we see a capacity addition? Is that not a requirement?

By 2020, we have to consider a new plant. Right now we can manage 700,000 units for domestic and export. But we have to review this in future as the market will grow and we might need one more plant in the future. It is my dream to sell a million units from India. But my aim is not number one position. It is not easy as our competition can make 1.75 million units a year. But being the biggest is not everything. At the second position, you can have happy customers and be a strong market leader.

Do you see India as a crowded car market with more than a dozen brands and many more waiting to enter?

There are about 14 mass players and five luxurious brands. Three more will enter soon. India is a very interesting and growing market. We came in the mid-nineties with Ford, GM, Toyota and Honda. But today who is a strong player and who is planning to shut down? Everybody has a chance to enter the market but selling and serving customers here is not easy. A good product is just one part which can be sold for one-two years. But sustaining success over a long period is not easy. 

How do you see the entry of Kia, part of your parent company?

Kia is a different entity and our production, R&D and channel are separate. There is a fair competition. Our strategies are different.

Any concerns in the Indian market with regard to regulations?

There is no doubt about the growth potential in India. Market size will expand. Sometimes I get worried about uncertainties. All of a sudden you have a diesel ban and demonetisation. Restrictions are imposed on taxi market. Decisions are taken suddenly. If we have a blue print, we can work with it. The industry, dealers and the workforce suffers and this worries us from time to time. Decisions should not be sudden.

There are about 14 mass players and five luxurious brands. Three more will enter soon. India is a very interesting and growing market. We came in the mid nineties with Ford, GM, Toyota and Honda. But today who is a strong player and who is planning to shut down? Everybody has a chance to enter the market but selling and serving customers here is not easy. Good product is just one part which can be sold for one-two years. But sustaining success over a long period is not easy. 

How do you see the entry of Kia, part of your parent company?

Kia is a different entity and our production, R&D and channel are separate. There is a fair competition. Our strategies are different.

Any concerns in the Indian market with regard to regulations?

There is no doubt about the growth potential in India. Market size will expand. Sometimes I get worried about uncertainties. All of a sudden you have a diesel ban and demonetisation. Restrictions are imposed on taxi market. Decisions are taken suddenly. If we have a blue print, we can work with it. The industry, dealers and the workforce suffers and this worries us from time to time. Decisions should not be sudden.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel