Hyundai sure is dreaming big for India. The Korean automaker which setup shop in India in 1996 has steadily expanded its presence in the Indian auto sector. As of today, it is India’s 2nd largest automobile manufacturer closely following Maruti Suzuki Ltd. After having tasted runaway success with models like the Santro, Getz, Accent, Verna, i10 & i20 it has now set sights on the other end of the spectrum- the luxury sedan segment.
According to a report in the Financial Express, Hyundai has grand plans to enter this burgeoning segment and take the fight to premium automakers like Mercedes, Audi BMW et al. They plan to bring in the Equus, Veloster & Genesis to Indian shores. While the Genesis is a luxury coupe & the Veloster a compact sport hatchback, the Equus is positioned as a high end luxury sedan gunning to take on the likes of the S class, A8 & the 7 series. Bold move indeed Hyundai. Bravo!!
While the rest of the market is still reeling from the effects of the slowdown, the market for high-end luxury cars has surprisingly been growing quite steadily. Experts are projecting a 20% increase this coming fiscal year bringing the figures up to 35,000 units from the current 29,000 units sold this year. A big number indeed; which also makes sense for an automaker to enter this segment. Question is, does Hyundai really have what it takes to crack into this established market segment?
Let’s see how the playing field is then. Currently dominated by the Germans via Mercedes Benz, Audi & BMW, Jaguar has also managed to shore up numbers and battle it out with the big 3. A high amount of brand recall suggesting a luxurious lifestyle & a sense of being elite have largely contributed to fuelling the social aspirations of the upscale consumer with money to spend. While the current market is choc a bloc full of Mercs, Jags, Audis & Beemers we also expect Lexus, Acura & Infiniti to enter the market very soon. And it’s very logical, the parent companies are already here- Toyota, Honda & Nissan already have a strong presence in our market. It’s only a matter of time before their luxury divisions enter India. Considering this, Hyundai is indeed on the right track since it might be able to beat the others to the punch.
But let’s play the devil’s advocate here for a while. Hyundai does not yet have a separate luxury car division. While they do sell high end luxury cars overseas (the Equus for example is sold under a different brand name in certain markets) we are more concerned with how it will be received in India. Yes people did buy a lot of Sonatas, Elantras but the question we ask is this; remember what happened to the Terracan, Tucson & the Sonata Embera? Mind you, we are merely playing both sides of the fence here. And that is purely because the Indian automobile market acts very weirdly. How else do we explain an increase in the luxury end and shrinkage in the mass production end?
Indian Automobile history is littered with corpses of supposedly premium cars that came in with a lot of pomp and show, promising a lot but
meekly fizzling out in the end. Names that we can distinctly remember- Standard 2000, Peugeot 309, Rover Montego, Ford Mondeo, Opel Vectra, Subaru/ Chevrolet Forester etc. All of them good cars in their own right, but the consumer did not accept them or appreciate them and they died a painful and rather abrupt death in India.
The most recent example being the Suzuki Kizashi, remember? Suzuki had to swallow this bitter pill the hard way. In spite of being one of India’s largest car manufacturers they found it tough to sell the Kizashi in India. It never really took off because the Indian consumer just wasn’t ready.
I mean would you really want to pay top dollar for a premium car sold by someone who also makes the Alto? It’s like going to a Louis Vuitton store and having them sell you Samsonite or even VIP. Remember the Grand Vitara? Same problem compounded by the fact that it had a very thirsty petrol engine. Down the drain it went which is a shame because it was genuinely a good product despite being petrol engined.
Which brings us to this- branding & positioning are very critical. The discerning upscale customer would not really want to buy an expensive product from a mass manufacturer. Not unless it is branded differently, positioned differently & be seen in the same orbit as some of the supposedly more ‘posh’ rivals it will have to compete with. Would you buy a Mercedes and be treated like an Alto customer at the dealership? No indeed- in fact you would downright hate it. Ergo you have to create a separate dealership network, a different branding & marketing strategy and target a different segment altogether. It means you have to voluntarily distance yourself from your more common bread & butter products.
Another factor we might also want to consider is that the existing luxury manufacturers are also trying to tap into the lower ends of the market & lure the upwardly mobile customer towards themselves by introducing entry level luxury products. Therefore you see models like the A & B class Mercedes or the BMW 1 series etc. It remains to be seen just precisely how Hyundai prepares its strategy to target this segment too, since it is also heating up quite quickly.
While Hyundai definitely is gauging customer perception towards their luxury products and hopefully taking a cautious approach, we can only say that 2014 is definitely going to be an exciting year and hopefully a very productive one. All the best to you Hyundai & here’s hoping for something really good.