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By Kim Hyun-bin
Hyundai Motors and Kia Corp. are banking on the Indian market, which has emerged as the world's third-largest automobile market after China and the United States. Many experts believe Hyundai Motor Group was in dire need of finding success in India to offset sluggish sales in China. Following last year's record-high sales in the South Asian nation, the company plans to continue its success in the electric vehicle (EV) market by launching the IONIQ 5 this year, according to industry officials.
According to the Society of Indian Automobile Manufacturers (SIAM) Hyundai and Kia sold 807,067 vehicles in India last year. This is the highest record in 25 years since Hyundai Motor established its Chennai plant in India in 1998.
The company is accelerating its market presence increasing sales by more than 20 percent annually. While Japan's Maruti Suzuki (1,576,025 vehicles) maintained the top spot, India's Tata Motors (526,821 vehicles), Mahindra & Mahindra (332,872 vehicles), and Japan's Toyota (159,801 vehicles) followed behind Hyundai Motor and Kia Corp.
Unlike Maruti Suzuki, which focuses on compact cars, Hyundai Motor and Kia are building a premium image based on Creta, a local strategic sports utility vehicle (SUV). Maruti Suzuki held the majority with 51.4 percent in 2018, but fell to 41.3 percent last year.
Hyundai Motor and Kia's market shares rose from 16.3 percent to 21.1 percent over the same period based on various models such as compact SUVs Hyundai Venue and Kia Seltos and local strategic model Kia Sonet. Tata Motors is also chasing Hyundai and Kia, rising from 6.4 percent to 13.8 percent of market share.
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| Kia Sonet / Courtesy of Hyundai Motor Group |
"We carefully analyzed the Indian automobile market and approached customers based on local strategic models, and timely supply was possible through local factory production, which led to sales growth," a Hyundai Motor Group official said.
In 2022, India's new car sales increased by 26 percent year-on-year to 4.72 million vehicles, surpassing Japan's 4.2 million automobiles to rank third in the global market for the first time. The Indian new car market has been stagnant since 2018 with just 4.4 million vehicles sold. In 2020, the number was less than 3 million vehicles due to the spread of COVID-19 but sales of new cars have been increasing as the average income of people in India has been on the rise.
The growth rate of the Indian market this year is expected to be more than 10 percent compared to the previous year, more than double the global market growth rate of 4.8 percent. According to market research firm Bain & Company, by 2030, new car sales in India are expected to reach 13 million vehicles a year, coming close to the U.S. market.
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| Hyundai Motor Creta / Courtesy of Hyundai Motor Group |
From the standpoint of Hyundai Motor and Kia, which are experiencing sluggish sales in China, India is a key region to increase sales. The EV market is also expected to grow as the Indian government is promoting policies such as expanding charging infrastructure and supporting EV production subsidies to increase the share of EVs from the current 2 percent to 30 percent by 2030.
Since 2019, Hyundai Motor has invested about 1 trillion won ($804 million) in the Chennai plant to establish EV production facilities there. Hyundai Motor is producing Kona EVs at its Chennai plant and plans to import IONIQ 5 to the market too.
Kia sells its EV6, exported from Korea. The Indian government imposes high tariffs of 60 to 100 percent on imported finished cars and 15 percent on completely knocked down (CKD) vehicles, meaning the product is delivered in individual parts, which are then assembled on-site, making it essential to have local production in India.
Global automakers, which have their eyes on the Indian EV market, are also speeding up their efforts to target the local market. According to Reuters, Renault is promoting the release of an electric hatchback, Kwid. Stellantis is also considering establishing an EV factory in India, and Chinese companies such as BYD are also entering India focusing on EVs.
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