To use this site, please disable the ad blocking feature and reload the page.
This website uses cookies to collect information about your visit for purposes such as showing you personalized ads and content, and analyzing our website traffic. By clicking “Accept all,” you will allow the use of these cookies.
Users accessing this site from EEA countries and UK are unable to view this site without your consent. We apologize for any inconvenience caused.
The Yomiuri Shimbun Sport utility vehicles on display at a Hyundai dealership in Tiruchirappalli, southern India, earlier this month
By Takashi Itoda / Yomiuri Shimbun Correspondent
21:00 JST, November 25, 2024
TIRUCHIRAPPALLI, India — Competition is getting fierce in India’s automobile market, the third largest after China and the United States. While Japan’s Suzuki Motor Corp. holds an overwhelming 40% market share, South Korea’s Hyundai Motor Co., which ranks second, has gone public to expand its investment in the country.
India’s conglomerates are also taking steps to strengthen their development capabilities through collaborations with major European automakers. Suzuki Motor’s market dominance is being tested.
Boosting production
Hyundai Motor India in October listed its stock simultaneously in the country’s two stock exchange markets and raised 278.5 billion rupees, or about 500 billion yen. Hyundai Executive Chair Euisun Chung expressed his determination to expand the company’s business in the country. Chung said the company will keep its pledges of localization and becoming a technological pioneer.
The funds raised will be used to improve the company’s plant in the southern state of Tamil Nadu and to develop electric vehicles. The automaker plans to start production at a plant in the western state of Maharashtra, which it acquired from General Motors of the United States, as soon as next year. Through these measures, the carmaker will boost its annual production capacity in India to 1 million units, about 1.2 times the current level.
Hyundai sold about 610,000 cars in India in fiscal 2023, up 8.3% from fiscal 2022. It has focused on sport utility vehicles and electric vehicles (EVs) to differentiate itself from Suzuki, whose main products are compact cars.
“Many of our customers are those aged in their 40s or older who will buy higher-priced cars as their incomes have increased,” said a sales clerk at a Hyundai dealership in Tiruchirappalli in the state of Tamil Nadu.
Working with European firms
However, the market has been slow to respond. Hyundai’s per-share price has dropped below the initial public offering as it faces increasing competition from other automakers.
Hyundai’s market share in passenger cars in fiscal 2023 stood at 14.6%, down 1.5 percentage points from five years before. Suzuki’s shares also dropped 9.5 points to 41.7%.
Instead of Hyundai taking advantage of Suzuki’s decline, its local conglomerates Tata Motors Ltd. and Mahindra & Mahindra Ltd. that are increasing their presence in the country. Tata’s market share doubled and Mahindra’s share increased 1.5-fold in just five years. Their strategy of introducing lower-priced SUVs and mini vans to the market has proved to be successful.
Both carmakers also aim to acquire advanced technologies related to EVs and other products through collaboration with Europe’s leading automakers.
Mahindra in February signed an agreement with Germany’s Volkswagen Group on collaboration in the EV field, such as the supply of electric batteries. Tata and Germany’s BMW Group in April agreed to collaborate on the development of automotive software.
A chance for Chinese automakers
Chinese automakers have been slow to enter the Indian market to date. The Indian government has been strictly screening Chinese firms trying to enter India due to territorial disputes between the two countries. Therefore, the situation in the Indian market differs from the East Asian market, in which Japanese, Chinese and South Korean companies are competing with each other.
However, some observers believe that the Indian government may start taking a more tolerant attitude toward Chinese firms in an effort to create jobs. Prime Minister Narendra Modi’s Bharatiya Janata Party suffered a major setback in a parliamentary election in June, and public frustration over the high unemployment rate among the youth is believed to have been behind the outcome.
Sanshiro Fukao, executive fellow at Itochu Research Institute Inc., said the market environment might change if more Chinese companies start production in India.
