Hyundai Motor Group plans hybrid cars for India in strategy shift: Report

Hyundai Motor Group plans to launch its first hybrid cars in India as early as 2026, three sources said, as the South Korean auto group shifts strategy to look beyond electric vehicles and boost its presence in a key market.

The group, housing Hyundai Motor and Kia Corp, is evaluating a hybrid sport-utility vehicle of size similar to its top-selling, mid-sized Creta SUV in India, said two of the sources, who have direct knowledge of the plans.

Both Hyundai, which is India's second-largest carmaker, and Kia are targeting the launch of hybrid SUVs in 2026 or 2027, the two sources said, adding that their EV plans for India were also on track.

In a statement on Tuesday, Hyundai Motor Group told Reuters it was "committed to a future of electrified mobility and will optimize product strategies for each market".

The pivot to hybrids - which use a gasoline powertrain and electric motor - comes as Hyundai sees a surge in sales of the technology in India, prompting it to shift away from an initial strategy that focused only on battery-driven electric vehicles.

Hyundai and Kia, which now sell only gasoline and diesel cars and imported EVs such as the IONIQ 5 and EV6, respectively, are working to launch their first India-made EVs in the world's third-largest car market in 2025.

"As local brands do not currently offer competitive hybrid cars in the country, Hyundai and Kia, who have experience of building hybrids, could command that market share in India," said analyst Shin Yoon-chul at Kiwoom Securities.

At the moment, that segment of the market is dominated by Japanese rivals like Toyota, he added.

Building EVs in India would have obvious long-run strategic value for Hyundai and Kia but the underdeveloped EV manufacturing and charging infrastructure remain a challenge, said one of the sources.

Until EV sales pick up pace, Hyundai "wants to get dibs on India's hybrid market", the person said.

That is why Hyundai has adopted hybrids as an "interim strategy" for India because it already has the technology globally, said a second source.
 

"It has now begun work on tailoring that technology for cars in India to make it mainstream," the source said.

The popularity of hybrids, which are cheaper than EVs and offer fuel savings over gasoline models without the headache of charging, has grown in India since Toyota Motor launched its first mass-market hybrid SUV in 2022.

Hybrid models, dominated by Toyota, accounted for about 2% of India's total car sales of 4.1 million in 2023. The share of EVs was just above 2%, even though the first affordable model was launched by domestic company Tata Motors in 2020.

The surge in hybrid car sales comes despite a high domestic goods and services tax of 43% on such models versus 5% for EVs, because of their environmental benefits.

While Toyota has been lobbying the government to cut the 43% tax, car makers like Tata and even Hyundai opposed such changes as recently as this year, saying they would hurt investments.

Hyundai's hybrids will allow it to better compete with rival and market leader Maruti Suzuki which sells such models in partnership with Toyota and plans more affordable launches with technology from parent Suzuki Motor.

India is Hyundai's third biggest revenue generator after the United States and South Korea.

It is doubling down on the South Asian nation, where it plans a $3-billion IPO, after cutting back China output following years of losses there, and having sold its two Russian plants.

Mid- and long-term strategies for India, including EV and hybrid plans, figured in discussions held by Hyundai Motor Group Executive Chair Euisun Chung during his second visit to the country last week in less than a year.