The country’s second largest passenger vehicle manufacturer Hyundai Motor India is launching Alcazar — the seven-seater family oriented sports utility vehicle (SUV) — this month. It would be competing with the likes of MG Hector Plus, Tata Safari and Mahindra XUV500. However, the company is not worried about competition and is confident that the new product, which is developed by the Indian R&D team, keeping in mind all aspects of the Indian customers’ needs, would bring disruption in the segment. In an interview with BusinessLine, SS Kim, Managing Director, HMIL, shared details about the Alcazar and the current Indian car market condition. Excerpts:
What are your expectations from the Alcazar, the segment, which is premium, but doesn’t have a big market?
After introducing Creta in 2015, we have more than six-lakh Creta owners and my understanding is that the Indian customers buy a new vehicle every four-five years. And, as the Indian economy is growing fast, a lot of customers want more premium experience in their vehicle. So, Alcazar is developed keeping that in mind and we expect our existing customers who want premium experience, to upgrade according to their needs.
But, don’t you think this may eat into the market of Tucson, in the premium segment?
That’s another premium segment, but I will say, in terms of volumes, it is not that big. But yes, it is growing, because in India, we are seeing the customer preference shifting one segment up. Year-on-year we have seen such segments growing. Tucson, which is priced at₹25-30 lakh, with the packaging and the powertrains that we are offering, has got good acceptance. In fact, in the first quarter of 2021 we have grown in terms of volumes from what we did last year. So, we have started showing positive signs there and are quite confident that Tucson will be able to create a good market place for itself.
With the lockdown happening again in many parts of the country, are you worried about car sales?
I don’t think that there will be a nationwide lockdown situation here in India anymore. Currently, we are watching the situation and there will be a bit of negative impact on customer sentiment in some States and cities. That is worrisome, but we are working on some digital platforms, and along with our dealer partners can manage the situation in a very different way. We have learnt a lot from last year’s lockdown.
In terms of your sales, how do you see the growth between SUVs and sedans going forward?
In the last three years, we have seen improving numbers YoY. In terms of HMIL’s SUV sales, in 2018, it was 22.3 per cent, which improved to 33.6 per cent and by 2020 it grew 42.5 per cent. And, now in the first quarter of this year, it is at 45.9 per cent. So you can clearly see that it has grown from 22 per cent to almost 46 per cent. In the hatchback segment, in 2018 it was 62.1 per cent and dropped to 45.3 per cent in 2020 and as of first quarter of 2021, it has further dropped to 41.7 per cent. In the sedan segment, in 2018, it was 15.6 per cent which has now dropped to 12.5 per cent. So, clearly SUVs have grown at a much faster rate, and for HMIL, even faster than the industry and that is why we are the number 1 SUV manufacturer now.
So basically, you expect your SUV sales to cross 50 per cent this year?
Yes, we expect to do nearly 50 per cent, but depending on the market situation. But, I am sure that the SUV market would be stable in the future.
Your sales are growing YoY, but how about production capacity expansion, as you are almost at 100 per cent capacity right now? Don’t you think it is time that you expand and as per analysts also, there will be a big gap between HMIL and Maruti Suzuki if you don’t do that…
We are watching the market very carefully and monitoring the market demand situation. But, at this moment, our position is that in the next few years, our capacity will exceed the market demand in terms of domestic and exports. But, if we come to the conclusion that we need some expansion, we will make a decision immediately.
What about the situation in exports market? You are not expanding there also?
Many countries are still suffering because of the pandemic. Once the situation improves, the demand in export markets would also come back. It is not only India, but the world is suffering.
What about the electric vehicle segment? Even companies like Tata Motors have achieved some numbers…
For the electric vehicles, I will say that for two or three years, the total penetration will not exceed more than one per cent (of overall market right now). It is our estimate…but EV market is critically important for HMIL and we are preparing for further expansion and a few years from now, we will introduce ‘Made in India’ EV. The main concern is the battery pricing right now and we are looking at finding local partners for that.
(The writer’s trip was organised by HMIL)