Hyundai may cede space to Kia as it goes ‘modern premium’ | business-news | Hindustan Times
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Hyundai may cede space to Kia as it goes ‘modern premium’

Hyundai’s new products will be in the higher priced segments. Be it the recently launched Elantra, or the forthcoming Tuscon, the SUV positioned above the Creta, which India’s largest selling passenger vehicle above ₹10,00,000.

business Updated: Sep 07, 2016 01:31 IST
Hyundai

Hyundai’s new products will be in the higher priced segments. Be it the recently launched Elantra, or the forthcoming Tuscon, the SUV positioned above the Creta, which India’s largest selling passenger vehicle above ₹10,00,000.

Hyundai Motor Company’s attempt to become a “modern premium” carmaker in India is being seen as a way to create space for its subsidiary Kia’s entry.

Head of sales for Hyundai India Rakesh Srivastava said that the average price of a Hyundai car has gone up from ₹4,00,000 in 2015 to ₹7,00,000 now. “From an affordable value brand proposition we are moving to a modern and premium brand,” he said.

Also, Hyundai’s new products will be in the higher priced segments. Be it the recently launched Elantra, or the forthcoming Tuscon, the SUV positioned above the Creta, which India’s largest selling passenger vehicle above ₹10,00,000.

Srivastava said that Hyundai will keep focusing on premium cars by introducing new features and technology to existing brands to appeal to the youth and launching new brands.

Sales of its entry-level cars Eon and i10 are, however, declining.

Hyundai, which owns one-third of Kia, denied any such development. “Hyundai is here to be in every space,” said Srivastava. “It will not give a single inch or a single unit to any other brand, irrespective of its origin.”

Analysts, though, do not agree with Srivastava.

“They are upgrading Hyundai as a premium car brand to create space for Kia at the entry level segment. Kia is a very strong brand, especially in entry-level segment. It doesn’t have a premium heritage,” said Amit Kaushik, India head of London-based consultancy Jato Dynamics.

In South Korea, the domicile of both brands, the brands are well placed to avoid too much of conflict. In India, Hyundai might be looking at replicating that strategy.

“India is the last of Hyundai’s successful markets to go through this transformation… It will take Hyundai at least three years to go through a complete shift,” said Anil Sharma, analyst at IHS World Markets Automotive.

But, the strategy isn’t a good one, warns London-based Deepesh Rathore, co-founder of consultancy firm Emerging Markets Automotive Advisors. All multinational carmakers, including Honda, Nissan, Volkswagen and Toyota haven’t done well while trying to be a premium brand.

Rathore believes that there is ample space for another mainstream carmaker without the need of Hyundai to turn into a premium brand. “Kia is the cheerful sporty Korean brand, while Hyundai is targeting the more conservative customer. The Kia customer will be slightly younger than the Hyundai customer – about three to five years,” he said.

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