Hyundai India projects extra Rs 13,000-cr investment by 2022

Korean automobile major Hyundai, second biggest in the domestic car market, aims to invest $2 billion (about Rs 13,000 crore) in this country over the next five years to develop and upgrade products.

It aims to expand its market share from the current 17 per cent and double domestic sales to a million vehicles annually in the next five years.

It has 11 products at present, which it says needs regular refreshing. "The product life cycle is shortening. Every four years, you need to upgrade design and technology of a model, while refreshing it with minor changes every year. Every upgrade requires an investment of Rs 400-500 crore. So, every year, we need to invest Rs 1,500 crore in upgrading three products and implementing major and minor changes," Rakesh Srivastava, senior vice-president (sales and marketing), told this newspaper.

Hyundai also aims to bring a new car model every year and this need an additional investment of Rs 1,000 crore annually. So, every year, up to Rs 2,500 crore will be invested, said Srivastava. He indicated that between 2018 and 2019, the company will be introducing two new mass volume products in the Indian market, aimed at millennials (the term for those born between the early 1980s and the early 2000s).

The company recently stopped production of its entry segment hatchback, the i10. Its entry segment now has two vehicles, the Eon and the Grandi10, a premium hatchback.

"We will definitely bring a new car in that segment (in place of the i10). Within the compact segment, volume lies at the bottom of the pyramid. But, we will bring a product just above this level. The model and its design have been frozen," said Srivastava.

The next product will be a smaller sports utility vehicle, to be placed below the Creta in price. "The millennial population believes in lifestyle and is ready to spend. These next two mass volume products from Hyundai will be positioned to appeal to these millennials," said Srivastava.

Hyundai currently has two factories close to Chennai, operating at nearly full capacity. So, additional capacity will also be needed in the next couple of years to be ready for producing over a million units in the next five years. Srivastava says the strategy will be to create adequate marketing facilities before going for higher production capacity. "To generate volumes, you need marketing and manufacturing capacities. Marketing is more important. Many players here have so much capacity but they are not able to sell cars and be profitable," he explained.

The company's network of 490 dealerships is also being given a new look and feel, on the lines of a Global Design Space Identity concept. Showrooms are turning brown from blue, along with other changes to give a premium look. About 140 dealerships have been upgraded.

"We are going deeper into the Indian territory. We want to grow the number of dealers, while ensuring sales per dealer does not go down," said Srivastava. The company aims to sell 530,000 cars in the domestic market this calendar year, growing six per cent from 2016. "We are confident of growth, though we will not launch any new mass model this year."