Hyundai Motor Plans to Launch Compact SUV in 2015

NEW DELHI: The Indian unit of Hyundai Motor is getting aggressive with product plans as it aims to tap the increasing popularity of utility vehicles.

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The nation’s second largest car maker plans to launch a compact sport-utility vehicle and an ‘SUV look alike’ crossover in 2015, trying to repeat its success in India in the past 17 years with compact hatchbacks and sedans. Hyundai is investing as much as Rs 1,500 crore on developing the two products.

 

Hyundai will launch the compact SUV, code-named GS, in the second half of 2015, said a source with knowledge of the company’s plans. The vehicle is developed at a cost of Rs 1,000 crore and is based on the ix25 SUV platform. The SUV, which will be pitted against the Ford EcoSport and Renault Duster, will be built 90% with local content, which should help keep cost low.

It has also decided to develop a crossover, either on the Verna or Elite i20 platform, with an investment of Rs 500 crore for India, the source said. That vehicle is also slated for launch in the second half of 2015. It will be followed by a multi-purpose vehicle in 2016, which will likely compete with the Maruti Ertiga, Toyota Innova and Honda Mobilio.

Rakesh Srivastava, senior vice-president of sales and marketing at Hyundai India didn’t provide details on the launch plans. “Hyundai is very strong in compact and sedan segment and has huge acceptance of its products. We will further extend it by our product line up by bringing in series of product in the SUV and MPV segment while continue improve on the compact and sedan category,” he said.

Hyundai is already present in the premium SUV segment in India with the Santa Fe, which has not done so well, selling only around 175 units a month. Analysts say if priced well, the product can succeed. “Looking at the customers’ preference over last two years, demand for both SUVs and MPV will increase in coming years. If OEM prices the product competitively, they will be able to increase their market share in this segment,” said Abul Majeed, partner at PricewaterhouseCoopers.

“As in this segment there are already existing players so the success will depend on the pricing and design of the product,” said Subrata Ray, senior group vice-president at ratings firm ICRA.

Hyundai‘s Srivastava said the company is known to offer world-class design and high-end features, “with an aggressive pricing by way of high level of localization”.

The Korean company is planning to increase its product capacity from current 6.80 lakh to lakh units by re-engineering production processes. In fact, it has already got an additional capacity of 50,000 units for local sales after some of the exports models were shifted out of India.

“We expect to gain volume with double-digit growth next year and increase market share by one percentage point at the already-high base in the passenger vehicle segment,” Srivastava said.

Its share of the local car market is expected to be 22% in 2014, compared with 20.1% last year. In the passenger vehicle space, which includes UVs, its share is expected to grow to 16.4% from 15.4%.

The utility vehicle segment has seen growth of 5.24% between April and November 2014 with sales of 3.63 lakh units. Car sales have expanded at a slower pace of 3.8%.

Looking at the brighter prospects in the UV segment, other manufacturers are also lining up their product in this category. Italian carmaker Fiat recently launchedAvventura in the crossover segment while Volkswagen is planning an SUV for India. Toyota has launched the Etios crossover a few months ago.

Maruti Suzuki is lining up a crossover and SUV. Mahindra & Mahindra has plans to launch as many as seven utility vehicles in 2015. Renault also announced that it would launch seven-seater multi-purpose vehicle Lodgy in India in early 2015.

 

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