Hyundai Doesn’t See A Small Car Revival In India At The Expense Of SUVs

Hyundai Motor India Ltd. doesn’t see small cars making a comeback in India, underscoring the so-called 'SUV-fication' of the world’s third largest automotive market.

“Aspiration is taking precedence over functionality,” Tarun Garg, chief operating officer of India’s second largest carmaker, told NDTV Profit on Tuesday. “A lot of first-time buyers are choosing SUVs over hatchbacks. 28% of Creta customers are first-time buyers. 40% of Venue customers are first-time buyers.”

That trend underscores the 'SUV-fication' of India’s car market; nearly 60% of all new cars sold today resemble sports utility vehicles.

In October, SUVs accounted for 57.5% of overall four-wheeler sales, according to data from the Society of Indian Automobile Manufacturers. SUV volumes grew 14% year-on-year to 2,25,934 units last month, as against that of hatchbacks and sedans which shrunk 17.32% to 1,07,520 units.

For Hyundai, SUVs make up 70% of sales with the third-generation Creta being a runway hit this year. The new seven-seater Alcazar as well as the sub-compact Venue are gaining traction from repeat as well as first-time buyers. The Exter, which shares its underpinnings with the Grand i10 Nios hatchback, has seen its sales surge after Hyundai packed it with a dual-cylinder CNG powertrain.

Still, Hyundai hasn’t forgotten the hatchbacks—it was afterall a Santro that made the South Korean carmaker a household name in India.

“But hatchbacks cannot be written off. In a four million-unit industry, one million is still hatchbacks,” Garg said. “We believe that there is still a lot of upside as far as volumes go, but at the same time—as a percentage—probably hatchbacks will not increase.”

“But stable growth is possible, especially with CNG.”

The carmaker sold 17,666 small cars in October. In the April-October period, this number stood at 1,40,428. In comparison, Maruti Suzuki India Ltd. was at 77,294 units in October and 5,09,643 units April-October. Tata Motors Ltd. was 1,05,946 units in April-October.

Hyundai will be where the customer is, Garg said.

“The customer wants ‘space bhi, mileage bhi’, and that’s working very well for us,” Garg said. “For Hyundai, you’ll see a push for all body types, but more action in the SUV space.”