Hyundai Motor forecasts record-breaking passenger car sales in India

Creta [Courtesy of Hyundai Motor]

Celebrating its 25th year of local production in India, South Korean automaker Hyundai Motor Co. is expecting a record sales performance in the Indian passenger car market for 2023, with annual sales projected to hit 600,000 units for the first time if the current monthly sales trend continues.

According to Hyundai Motor Group on Wednesday, Hyundai Motor sold 559,361 passenger cars in the Indian domestic market from January to November 2023, already breaking the record set with 2022’s 552,511 figure. Kia Corp., which started local sales in India in 2019, also demonstrated significant growth by selling 242,464 units until November 2023, a substantial increase compared to the 45,226 units it sold during its first year in the country.

The success of Hyundai Motor in the Indian market is attributable to its localization strategy. Hyundai’s Santro, a locally targeted compact car model produced at the Chennai plant in 1998, gained popularity in India as it catered to consumers in India, the majority of whom are Hindu, featuring a tall design to accommodate turbans. The strategy of maximizing interior space despite a small exterior footprint worked well for Indian consumers, according to the automaker.

Thanks to the localization strategy, Hyundai increased its sales from around 410,000 units in 2014 to over 550,000 units in 2018 and the company quickly rebounded from a decline to around 420,000 units in 2020 due to the Covid-19 pandemic.

Another key factor in Hyundai’s success is its sales strategy of focusing on mid- to low-priced vehicles. Its flagship compact sports utility vehicle (SUV), Creta, starts at 1,087,000 rupees (about $13,000), and the smaller Venue starts at 789,000 rupees. Even the most expensive model excluding electric cars, Tucson, does not exceed 50 million won ($38,000). Creta and Venue ranked first and second in Hyundai’s sales lineup from January to November 2023, with 148,068 and 114,072 units sold respectively. In contrast, German premium automakers including Bayerische Motoren Werke AG, Mercedes-Benz AG, and Audi AG, which adopt a high-pricing strategy, have a market share in the Indian domestic market that is lower than 0.5 percent.

The strategy of rapidly introducing new models, particularly in the popular SUV segment, also led to growth in the Indian market. Hyundai Motor released the adventure edition of Creta, two years after launching the 6-to-7-seater SUV, Alcazar, for the first time in India in 2021. Thanks to these localization strategies, Hyundai and Kia have maintained their position as the second-largest player in India, following Maruti Suzuki India Limited, for over a decade.

Hyundai Motor had a market share of 15.4 percent in 2013, which was only one-third of Maruti’s, but its combined market share hit 20.9 percent in 2023 to date, narrowing the gap to half of Maruti’s 41.7 percent share. The difference with Japanese automakers such as Toyota Motor Corp. and Honda Motor Co., who have market shares in the 5 percent range, is substantial.

Hyundai Motor’s next goal in the Indian market is the expansion of its electric vehicle (EV) sales after the February 2023 launch of the Ioniq 5 in the country. The model has been selling more than 100 units per month since April, and sales have already topped 1,100 units in the year to date. The automaker will introduce the electric version of Creta, Creta EV, into the Indian market by the end of 2024, which is expected to boost its EV sales.