Hyundai unveils ambitious SUV strategy to reclaim market share in India

Hyundai Motor, the South Korean automotive giant, is set to embark on an aggressive strategy to reclaim its market share in India, as it prepares for a groundbreaking USD 3 billion initial public offering (IPO) in the country. The company, which has long held the position of the most successful foreign automaker in India, is facing mounting pressure from domestic competitors and is responding with a comprehensive plan to launch a series of new sport utility vehicles (SUVs).

According to three sources familiar with the company's plans, Hyundai's SUV rollout will commence with the introduction of its first India-made electric vehicle in early 2025. This will be followed by the launch of at least two gasoline-powered models specifically tailored for the Indian market, scheduled to debut from 2026 onwards.

The strategic move to focus on higher-margin offerings comes as Hyundai prepares for its first listing outside of South Korea. This dual approach of product expansion and public offering underscores the company's optimistic outlook on India, which stands as the world's third-largest automobile market. The emphasis on India gains particular significance as Hyundai's presence in China diminishes and sales in its home market of South Korea continue to decline.

Hyundai's dominance in India has historically been second only to Maruti Suzuki. However, the competitive landscape has undergone a rapid transformation in recent years. Domestic powerhouses such as Tata Motors and Mahindra & Mahindra have made significant inroads, eating into Hyundai's market share with their new SUV offerings. This shift in consumer preference from small cars to SUVs has resulted in Hyundai's market share in India dropping to 14.6% from 17.5% just four years ago. In contrast, Tata's share has nearly tripled to 14% over the same period.

The challenge facing Hyundai is substantial, as noted by V G Ramakrishnan, managing partner at consultancy Avanteum. "Hyundai is in a tough spot," he stated. "Its primary focus should be on how to retain market share, and the only way to do that is with a faster product roll-out."

India represents Hyundai's third-largest revenue generator globally, following the United States and South Korea. The company has already invested USD 5 billion in the country and has committed an additional USD 4 billion over the next decade. During a visit to India in April, Hyundai Motor Group's Executive Chair Euisun Chung expressed pride in the company's consistent second-place market position and affirmed their commitment to elevating Hyundai as a premium brand in the country.

The introduction of Hyundai's India-made electric SUV in 2025 is just the beginning of an ambitious EV strategy. According to the sources, the company plans to launch four more electric vehicles by the end of the decade, as it evaluates the potential of making India a regional EV export hub. Additionally, Hyundai will introduce hybrid cars in India, aligning with its broader global strategy to increase overall sales by 30% by 2030.

Hyundai's focus on higher-priced vehicles in India has already shown results, with the share of its cars costing at least USD 18,000 doubling to 15% between 2021 and 2023. This "premiumisation" strategy has helped the company achieve some of the highest profit margins among its peers in India, albeit at the cost of sales volumes.

As Hyundai prepares to sell up to 17.5% of its shares in the Indian business to the public, it will need to strike a delicate balance between maintaining market share and preserving margins. Industry expert Ramakrishnan warns that any drop in either metric could lead to scrutiny from shareholders post-listing.

The competitive pressure on Hyundai is intensifying, with rivals launching their own ambitious plans. Tata Motors, India's leading EV manufacturer with over 75% market share, has announced plans for five new electric vehicles in the next three to four years. Mahindra & Mahindra is set to introduce seven electric SUVs and six new gasoline-powered SUVs by 2030. Market leader Maruti Suzuki is also doubling down on SUVs and hybrids, with plans for six EVs by 2031.

As one Indian supplier to Hyundai aptly summarised, "What brought Hyundai so far will not necessarily take it into the future. Competition is more intense." The coming years will be crucial for Hyundai as it navigates these challenges and seeks to reinforce its position in the dynamic Indian automotive market.