Hyundai's Marketing Strategies in India

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Case Details:

Case Code : MKTG095
Case Length : 16 Pages
Period : 1998-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Hyundai Motors
Industry : Automobile, Passenger Cars
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"I believe that the primary reason for HMIL's success is that we never allowed ourselves to be complacent. We were continuously innovating at the marketplace, taking ourselves head on the competition."¹

- YS Kim, former Managing Director, Hyundai Motors India Limited in 2002.

"As long as Hyundai keeps giving the Indian customer fresh new products at competitive prices and builds excitement around them like they have successfully done, they can sustain their good run so far."²

- Vinay Kamath, Journalist with Businessline in 2002.

The Price Cut

In August 2004, a leading business newspaper reported that Hyundai Motors India Limited (HMIL), an Indian subsidiary of the South Korea- based Hyundai Motors Company (HMC)³ was expected to reduce the price of its flagship car - Santro - by as much as Rs 40,000. Industry experts were expecting a reduction in Santro's price in response to the price war being waged by the market leader in India - Maruti Udyog Limited (MUL),⁴ which had reduced the price of its largest selling car in the B segment - Alto - by Rs 58,000 in two price cuts starting from September 2003. This move had resulted in Alto replacing Santro as the largest selling car in the B segment in the period January to June 2004 (Refer Exhibit I for the market segmentation of the Indian car industry).

Rebutting the report on price cuts, HMIL's managing director, BVR Subbu (Subbu) said, "We are not cutting prices on the Santro. We have allowed our competitors the prerogative of cutting prices."⁵ Several dealers of HMIL also felt that the company would not reduce Santro's price as it had not adopted such tactics earlier.

Santro had been the most successful product of HMIL and was also the largest selling car in the B segment till the fiscal year 2003-04.

Introduced in late 1998, Santro had emerged as the second largest selling car in India after MUL's M800 and had retained its position till March 2004 (Refer Exhibit II for the total units and value sales of the top eleven car models in India).

In mid 2004, HMIL with its four models, Santro, Accent, Sonata and Elantra, was the second largest car company in India with 19% market share in the industry. The company was planning to launch another model, 'Getz', in September 2004.

Hyundai's Marketing Strategies in India - Next Page>>

1] "Right Team Key to Success - Kim," The Hindu, April 22, 2002.

2] Vinay Kamath, "Hyundai in a Hurry," Business Line, July 11, 2002.

3] Seoul (South Korea) based, HMC is the largest carmaker in South Korea and is the eighth largest automaker worldwide. It produces about a dozen models of cars and minivans, as well as trucks, buses, and other commercial vehicles. HMC's exports include the Accent and the Sonata, while its Korean models include the Atos subcompact. The company also manufactures machine tools for factory automation and material-handling equipment.

4] Maruti Udyog is India's leading maker of automobiles. Through a partnership with Suzuki, the company makes models such as the popular Maruti 800, Alto, Gypsy, and Zen. In addition to domestic sales, Maruti also exports its Alto model to many European markets including Austria, Belgium, France, Germany, Greece, Italy, the Netherlands, Switzerland, and the UK.

5] Nandani Sen Gupta & Lijee Philip, "Santro to become cheaper while Getz gets a foothold," The Economic Times, August 18, 2004.