Hyundai's journey in India has been through SUVs

By revenue, Hyundai Motor is the third-largest rider conveyance institution successful India, down Maruti Suzuki and Mahindra and Mahindra, with revenues of ₹60,310 crore successful 2022-23 and ₹52,158 crore for the 9-month play ended December 2023. 

With 13 models currently, Hyundai India has an wide marketplace stock of 14.6% successful rider vehicles, conscionable up of Tata Motors Ltd's 14%, but good down marketplace person Maruti's 41.3%. Its operating borderline astatine 9.1%, however, is up of Maruti's. M&M is up of both, but its numbers see tractors.

But if determination is 1 communicative the Hyundai prospectus tells, it is of the ‘premiumisation’ of the Indian rider conveyance marketplace successful the past fewer years. The mean terms of a rider conveyance has risen from ₹4.9 lakh successful 2018-19 to ₹6.6 lakh successful 2022-23. 

“Modern consumers successful India are preferring mid-end oregon top-end mentation of vehicles, moving distant from accepted fuel-efficient, budget-friendly tiny cars and towards higher-priced feature-loaded larger cars," Hyundai says successful its IPO document. A cardinal result of this determination to premium vehicles has been soaring income successful the sports inferior conveyance (SUV) segment, which present accounts for implicit fractional the rider conveyance marketplace by volume, against 23% conscionable six years ago.

The SUV story

The communicative of SUVs, which person higher nett margins, is of some request and supply. As per Hyundai's prospectus, the manufacture has launched implicit 30 SUV models successful the past 5 years, compared with conscionable 4 hatchbacks and 3 sedan models. On the request side, passengers person travel to question the much ‘premium’ features associated with SUVs. Thus, the alleged ‘compact’ SUV conception (priced astatine ₹6-15 lakh) accounts for 57% of income wrong the wide SUV category.

Between 2021 and end-2023, the stock of SUVs successful Hyundai’s full rider conveyance income roseate from 45% to 62%. “In enactment with our premiumisation strategy, we expect SUVs to proceed to signifier a important information of our rider conveyance portfolio and sales," the institution said successful its prospectus. “Compared to different segments, the SUV conception is overmuch much fragmented with nary wide person and precise adjacent contention betwixt (original instrumentality manufacturers)." 

Hyundai had a 17.7% stock successful the SUV conception successful 2022-23, and was ranked third.

The electrical conveyance journey

Another communicative that volition signifier car businesses—and shareholder returns from them—is the electrical segment. If the Indian rider conveyance communicative has been 1 of an accelerated displacement towards SUVs, globally, the communicative is 1 of a displacement toward electrical vehicles, and the increasing dominance and aggressiveness of Chinese EV makers. 

In India, EVs accounted for conscionable 2.3% of rider conveyance income successful 2023-24. Market stock successful the EV conception has been shifty. M&M dominated till 2019. Tata Motors past surged up with the instauration of its Nexon, followed by Tiago, Tigor and Punch. In 2023-24, Tata Motors stood retired with a 71% stock of India's EV market, portion Hyundai’s stock was astir 2%.

Hyundai volition beryllium the 2nd axenic Indian rider conveyance concern to database connected the banal markets, aft Maruti. Tata Motors and M&M are listed, but they besides merchantability commercialized vehicles and tractors, respectively. Over the past 5, 10 and 20 years, each 3 companies person mostly outperformed the benchmark BSE Sensex.

Can Hyundai predominate successful SUVs?

The concern lawsuit for Hyundai pivots astir SUVs. Between 2018-19 and 2023-24, the conception grew astatine an mean yearly 23%. By comparison, multipurpose rider vehicles (MPVs) grew astatine 14%, and hatchbacks, sedans and vans successful azygous digits. 

Between 2023-24 and 2028-29, Hyundai expects SUVs to turn astatine 7-9%, followed by MPVs astatine 6.4-9.4%. In crisp contrast, hatchbacks and sedans are not expected to turn beyond 2%.

Hyundai's prospectus, quoting CRISIL MI&A, forecasts the industry's mean maturation astatine 4.5-6.5% per twelvemonth betwixt 2023-34 and 2028-29, selling 5.2-5.7 cardinal vehicles successful the home market. By 2028-29, SUVs are expected to relationship for arsenic overmuch arsenic 60% of the rider conveyance market, followed by hatchbacks, whose stock is expected to autumn from 28% presently to astir 21-23%. 

For investors, the question is whether Hyundai, which has been a dependable 3rd successful SUVs, tin proceed to clasp its own, if not predominate the fast-growing segment.

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