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With new Santro, Hyundai vs Maruti Suzuki comes full circle

India Notes 2018-10-10 07:22:17

The new Santro, which will sit between the Hyundai Eon and Hyundai Grand i10, is expected to be priced between ₹ 3.5 lakh and ₹ 4.5 lakh.

Chennai: Hyundai Motor India Ltd will bring back its popular small car brand Santro in India, as the country’s second-largest carmaker by market share seeks to intensify its competition with Maruti Suzuki India Ltd and others in this segment. The Santro will go on sale later this month, coinciding with Hyundai’s completion of two decades of operations. The latest car will be a completely new Santro, which first went on sale in September 1998, before it was phased out in 2014.

Hyundai’s decision to reintroduce the brand is considered a crucial attempt by the company to claw back market share it lost to rivals in the small car segment, with the key being Maruti Suzuki. The company also realizes that building a brand in India from scratch is an uphill task and not many could manage it successfully.

The new Santro will also have to compete with models from Renault and Tata Motors, among others.

The new Santro will be Hyundai’s first new model in the small-car segment after nearly six years. It had introduced the Eon in October 2012. The new Santro is also Hyundai’s first new model after the 2015 launch of Creta, a sports utility vehicle.

The time has come for Hyundai to enter or re-enter the segment where the company has no presence at the moment, said Y.K. Koo, managing director, Hyundai Motor India Ltd. With the introduction of the Santro, the company would have a formidable line-up of products, he said.

Hyundai expects to manufacture 8,000-10,000 units of the new Santro each month, and achieve a 17% share of the domestic market this fiscal. Its market share has been stagnant at around 16.5% in the past two years due to the lack of new products in the mass-market segment and production constraints at its factory in Chennai.

Over the same period, Maruti Suzuki expanded its domestic market share from 47% to 51% as of the last fiscal.

Santro’s reintroduction comes at a time of subdued auto demand due to worsening macroeconomic factors such as higher crude oil prices and the weakening of the rupee against the dollar, which have hit consumer sentiment.

Koo is undeterred by the negative sentiment in the market. He expects the new Santro to help Hyundai gain at least 30% share of the compact-car segment as it will also attract a lot of first-time car buyers.

“New and good products will always create good demand, though the market is not much positive as of now,” he said. “The last three months, the growth in sales has been negative. The Kerala floods, oil price rise and rise in third-party insurance premiums may have had a negative impact.”

The new hatchback will be produced in Chennai and shipped to Europe, Latin America and Africa. Also with the new Santro, Hyundai will make the global debut of its in-house automated manual transmission technology (AMT).

“Santro was a big responsibility on us and our engineers were actively involved with the development centres outside India,” said a senior Hyundai executive, who did not wish to be named.

The ride for the Santro, though, may not be smooth as Tata Motors’ Tiago and Maruti’s Alto have been dominating sales in the segment.

The Santro’s return is a positive development as the brand resonates well, especially among customers, after declining sales volumes for Hyundai Eon, said Anil Sharma, associate director at MarketsandMarkets, a market research firm. “The challenge for Hyundai is to expand capacity as the demand in the market is also not very stable as market leader Maruti Suzuki has also been impacted,” Sharma said. “The next 12 months are not looking rosy for the automobile industry but it won’t be very difficult to sell the Santro since it is a small budget car.”

First Published: Wed, Oct 10 2018. 07 22 AM IST