It neither boasted of the American innovation nor had it the German engineering legacy on its side. The Japanese had since homed in on India to create a global leader in Maruti while several of its country cousins were already in the fray jockeying for a berth in the Indian passenger car market that headed northwards.
Its Korean origin made it a bit of an odd player but Hyundai Motors was set for a firm Indian identity.
This was 1998. Given that the Indian passenger small car market was dominated by Maruti, Santro from Hyundai (within a few months of its launch) emerged as a force to reckon with.
Cut to 2019, Maruti has reimagined leadership retaining 50 per cent passenger vehicle market share while several global car brands have either exited or stayed as fringe players.
Happy Number 2?
Hyundai story, however, has endured placing the company as a firm number two in the passenger vehicle market in India. All these years and decades, Hyundai has shied away from taking a shot at the number one slot either convinced that Maruti is unassailable at the top or it made perfect sense to stay happy at number two while building capacity for the global market.
To mark its 23 years of existence in India (the company was incorporated on May 6, 1996), Hyundai last week rolled out the world’s first ‘Made in India’ ‘Venue’. This is said to be a game changer for it claims to place technology and aesthetics at par.
The ‘Connected Car’ has given a new impetus to ‘Make in India’ initiative marking Hyundai’s creditable export journey of two decades. The company began exports from India -- now Hyundai's largest manufacturing base outside its home market -- by sending 20 cars to the neighbouring Himalayan country of Nepal in 1999.
Make in India in 2000
It was early 2000, when during an extended chat with him, BVR Subbu, the then president of Hyundai Motor India, revealed his company’s push for numbers. This was not exactly about being the number one passenger car seller in India but about being the number one car exporter from India. Subbu, the man who made Santro a household name in India and abroad, had a plan that envisaged Hyundai as the Indian global auto manufacturer.
Hyundai is now aiming to reach production milestone of 10 million units during the first-half of 2021. It marked the production of its eight-millionth car at its factory in Irrungattukottai near Chennai last year, since it commenced production in India in 1998.
Now why is production capacity a key talking point today? As India tunes into the national election verdict, the economic clues present a sense of unease. The consumption story is under duress.
India’s two premier passenger car makers – Maruti and Hyundai began the new fiscal on a negative note reporting a decline in their domestic sales in April. While Maruti reported an 18.7 per cent fall, Hyundai posted a decline of 10.1 per cent in domestic sales in the first month of 2019-20 fiscal.
This presents a piquant situation to leading car making companies in India. India had built capacity in the hope that there would be sustained demand. Passenger vehicle sales moved up from 32.8 lakhs in 17-18 to 33.7 lakhs in 18-19. The production though grew modestly from 40.20 lakh to 40.26 lakh during the period under review.
The export window
The domestic passenger car market is said to stay either stagnant or head south in view of various factors. These include uncertainty over fuel prices, coming up of BS VI emission norms from next year and upcoming EV policy.
Passenger car dispatches were growing at 6 percent in the first six months but fell by 3 percent in the second half and by 5 percent in the last quarter of FY19.
Are exports a way out? Clearly, first Hyundai and then Maruti, have banked on exports to show the way. This is where Hyundai’s sustained pitch for global consumers is drawing dividends.
The Korean major happened to be the only company to achieve export growth during 2018. Its share in total exports grew by two per cent to 22.8 per cent during the year.
All the other top five players witnessed slump in exports. Ford India, Hyundai and Maruti Suzuki, the top three passenger car exporters contributed over 60 per cent to the total exports. During the just concluded fiscal, Hyundai is said to have clocked about 5.5 percent growth getting pretty close to the export leader Ford India.
Now, if you look at Maruti, which is the third largest passenger vehicle exporter, there was an 8 percent dip in export during 2018 calendar. The fall is said to have accentuated to 14 percent during the last fiscal.
Lead time advantage
Hyundai now exports its India-made passenger cars to 87 countries – from Latin America to Middle East to Africa. Maruti too has a rich footprint.
If one were to take a lead out of the three other auto verticals – commercial vehicles, three-wheelers and two-wheelers, the export buoyancy is well established.
The decision by the market leader to cut production for the third consecutive month in April underscores subdued demand for automobiles. While it too is under pressure, Hyundai has commenced production of the much-awaited subcompact SUV's launch later this month, on May 21, 2019.
Venue's global debut
Venue made a simultaneous world debut in India as well as the United States, at the New York International Auto Show 2019 last month. India is the first market to get the new Hyundai Venue, and it will subsequently be going on sale in other markets as well, including Korea and the US.
Whether or not Venue is able to truly explore Indian avenues, what is clear is that there is a market for it beyond the borders.
Given the demonstrated auto exports capability, it is time to reimagine the Made-in-India car paradigm. It is now no longer about your origin country but about your new well found address here that shall make India proud.
That should make it a Korean-Japanese jugalbandi for a perfect Indian Motown dream. The Americans here are most welcome too to sing ‘Made in India’!
As that happens, the domestic market is definitely in for a rebound!
Rakesh Khar is senior editor, Special Projects, Network 18. He writes at the intersection of politics and economy.