Posted: October 28, 2010 in News & Updates
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What does a company do if its primary market catches the fancy of more and more competitors, making it tougher to do business on an existing model? In the case of Hyundai Motor India (HMI), it has decided to get right back at its rivals by launching a product in the premium segment.

The Korean carmaker, one of the heavyweights of the domestic car market and also the largest exporter from India, is facing the brunt of increasing competition as various companies such as Volkswagen, Ford and Nissan have entered its bread-and-butter small car market. In response, it has strengthened its small car portfolio with a model refreshment of its bestseller, i10, while also attacking the higher rungs of the market with the Santa Fe premium SUV.

Says Arvind Saxena, Director, Marketing and Sales, HMI, “We want to be seen as a manufacturer with a full line-up and will now continue to focus on the entire market, including the premium end. We already had a huge customer base, but needed to expand our premium-end options for customers who wanted to move up from our entry products such as the small cars or sedans such as the Verna and Accent. It also showcases our technological capabilities, while giving existing and potential customers confidence about the company.”

Underlining the importance of the Santa Fe in its product strategy, Hyundai launched the SUV in an elaborate ceremony in the middle of Rajasthan’s Thar desert, some 150 km from Jodhpur. Asked what prompted the company to think of an out-of-the-box launch, Saxena says that the desert reflects the spirit and purpose of the quintessential SUV. “The desert gives a feeling of sportiness and ruggedness – the challenging terrain reflects the personality of the Santa Fe,” he elaborated.

Imported as completely-built-units from Korea, the Santa Fe (Rs 21-23 lakh) targets the rapidly growing SUV segment in India. The SUV market is witnessing a higher growth than the overall car industry at 70-80 per cent annual growth. Currently, the Toyota Fortuner and the Ford Endeavour are the bestsellers in SUVs, say industry experts.

As Saxena explains, “There has been a lot of interest in the Indian market for SUVs. We had been looking for options and were deciding between the new Tucson (iX35) and the Santa Fe. We chose the latter because the market here prefers bigger SUVs. If the volumes are encouraging, we may evaluate importing knocked down kits, which would help in reducing prices.”

Industry watchers say the Santa Fe has much higher relevance for brand Hyundai in the long-term, as it tries to break away from the mould of being just a small car maker in India. Globally, Hyundai has found success across the product range with premium products like the Genesis sedan and the Equus luxury saloon, but in India the brand is identified largely as a maker of small cars and mid-size sedans. As the global markets get further integrated and the Indian market grows, it is important that Hyundai builds a strong reputation across segments.”

Hyundai’s offering in the segment, which has come about after more than a year of study, boasts of the highest horsepower (197 bhp) in the Rs 17-23 lakh price range. It also tries to justify the higher price over its close and established competitors by adding a host of features such as the Electronic Stability Program, Traction Control System, a six-speed manual gearbox and roll-over sensors besides segment standards such as an anti-lock braking system and airbags. It is targeting yearly sales of 600-800 units for the premium SUV.

As Saxena explains, “Our product is best-in-segment in terms of power, safety and performance. Low presence of the brand image in the premium segment may be a bit of a challenge, but we’re aiming to get a reasonable share of the market.”

To create excitement among potential customers of the Santa Fe, Hyundai is initially advertising in mostly newspapers and magazines. Besides, it is also marketing the SUV on various Web sites and search engines. It is, however, yet to launch a TV ad as the company feels it will not be able to match the demand created by a major nationwide advertorial campaign.

“TV ads may come by next year depending on the market response. Right now, we have low supply of cars from Korea, so advertising a lot may mean that we will not be able to match up to (potential) high demand. We’re positioning it in the luxury crossover segment and may later associate with premium events and sport such as golf. That will bring us closer to the target customers,” says a top official in Hyundai’s advertising team.

Roudra Bhattacharya
The Hindu Business Line, Brand Line


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