Jan 8, 2009

Business - Q&A MD Hyundai Motor India Ltd

Vikram Gour

Hyundai has broken the norms by launching their much awaited car, the i20 literally in the last week of December. December has been known as a month of low sales and even more so considering the recession that the entire auto industry is facing. Hyundai's last-minute-launch agenda has raised a lot of questions, not just about the car but what the company's plans are. ZW speaks with HS Lheem, MD, HMIL to get a grasp on what's on Hyundai's agenda.

ZW : Considering the present market situation, how important is the i20 as a model to Hyundai India?

Lheem : The i20 is a very important model for us. It is exclusively produced in India, like the i10, and exported to the world market. No other country produces these cars, and both these models are as Indian as they can be, yet ready for a global audience. The i10 is 90 per cent indigenized, and the i20 has an Indian component content to the tune of around 85 per cent. We have proven to the world that global cars can be manufactured in India, and the i20, like the i10, will carry this forward for us.

ZW : With the entry of the i20, which falls into the B segment, Hyundai is slowly becoming a player at having more than one option in a single segment. Is this how you envisaged the Indian game plan?

Lheem : We have designed our plan in accordance with the Automotive Mission Plan 2016, as projected by the government. It is in our best interest to work according to those guidelines. If India is to become a small car hub, then we will work towards that. Moreover it does not hurt to have more than one option in a particular segment, as customers have more to choose from. If the Santro and i10 are in a single segment, then the Accent and Verna also fall into a single segment. Now with the i20 and Getz, we again offer two cars in similar segments. At the end of the day, the customer benefits from the abundance of choice.

ZW : Now, if I am correct, the Getz will be replaced by the i20 in Europe. What is the vehicle's fate in India, especially since the i20 is actually its successor and priced rather similarly?

Lheem : That is correct, the i20 will replace the Getz in European markets, however it will continue to be sold in India. This is because we feel that the Getz caters to a slightly different audience than the i20. The Getz brings in the lower end of the spectrum the i20 is answerable for the high end hatchback buyer. I feel that this arrangement will expand the segment, not cannibalize it. Look at the Santro and i10. The i10 has not eaten away at Santro sales at all. The Getz shall remain as an integral model in our line up.

ZW : The one question plaguing everyone's mind is the single engine option on the i20. In today's market situation, wouldn't a diesel i20 make sense?

Lheem : We have over six engine options for this car which include the 1.2 liter Kappa petrol engine, a 1.4 liter and a 1.6 liter petrol unit, a 1.4 low speed diesel, a 1.4 litre high-speed diesel, and a 1.6 liter diesel. So we have the engines, but for the domestic market we thought that the 1.2 liter Kappa engine made most sense because it offers an enhanced efficiency along with decent power. If you drive it, you will see that it is not underpowered. Moreover, the 1.2 liter engine is in accordance with India's small car guide in order to gain the additional excise benefit as specified by the government.

ZW : Exports make up a major part of Hyundai India's volumes. Hyundai has taken to catering to the export market rather seriously and the i20 too will be made exclusively in India for global markets. With the industry sliding downhill at the moment, where do Hyundai's export plans stand?

Lheem : We have followed in detail the guidelines laid out in the AMP 2016. It is our endeavour to do all that we can do to be in accordance with that plan. However, the current market conditions are making it difficult to sustain the momentum we have built up in exports. We strongly require the support from the Government in this regard. At present, Hyundai accounts for 70 per cent of total automobile exports from India. We are the country's largest passenger car exporter and the revenue is not small either.

We have shown a great level of dedication to the Indian car market. Our facility caters to a global audience for both the i10 and i20 are exclusively manufactured here. The Government needs to realize this aspect and provide some more relief for export operations in terms of offering preshipment credit, expand the focus markets as well as increase support for R&D work in India. All this can go a long way in helping not just us, but other manufacturers as well in truly making India a small car hub.

Exports might dip in 2009 but we do have an ambitious plan for our business both domestic and international which should see us through.

ZW : Does 2009 also hold the debut of a new small car from Hyundai?

Lheem : 2009 will see a lot of action, but I assure you that a new small car is not on the cards. We however do plan on the 1.4 liter i10 diesel next year as well as the face lifted Sonata. The diesel i10 is a product we feel will have a strong audience in India.

The new car that you speak of is a model that we plan on slotting in below the Santro. It is not going to compete with the Nano, as we do not have any plans along those lines at all. This new small car will debut in a couple of years.

ZW : Lastly, what would you like to see in the near future that will help kick start the industry?

Lheem : We are happy with certain measures that the government took in order to minimalize the damage on the Indian economy by reducing 10 per cent on fuel prices, 1 per cent on bank interest rates and 4 per cent on excise duties.

These have done some good, but what is really key to kick start the industry is to make retail finance easily available. This issue needs to be further addressed in order to get the market to bounce back. Apart from that, certain revisions as already highlighted regarding the export sector also need to be addressed. We hope the government understands how much is at stake in the automobile export business and corrective measures are taken at the earliest.

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