Hyundai Motor India - History, sales, and performance

Hyundai Motor India Limited (HMIL), the wholly owned subsidiary of the South Korean automobile manufacturer Hyundai Motor Company, is planning an initial public offering (IPO) soon that could raise over ₹26,000. This comes at a time when the company has cemented itself as the second largest carmaker in India after Maruti Suzuki with a market share of 15% in FY23.

Hyundai Motor commenced operations in India in 1996 with its first plant in Irungattukottai near Chennai and has emerged as a key player in the Indian automobile industry today. With two highly advanced production facilities in Tamil Nadu, Hyundai cars such as Santro, Grand i10, i20 Elite, Verna, Creta and Venue have become household names. The company is now gearing up to ride the electric vehicle wave in India, with firm plans to introduce multiple new EV models over the next few years.

As Hyundai inches closer to a mega IPO, it is an apt time to evaluate the scale of its India operations, sales performance, countrywide network, financial growth and competitive positioning. This provides perspective on Hyundai's ascent in the Indian market and growth prospects as a publicly listed firm.

India operations

Hyundai began local manufacturing in India with the Santro in 1998 and today has an annual production capacity of over 720,000 units from its two plants. The company has invested over $4 billion in India so far and developed an integrated ecosystem from manufacturing to R&D. HMIL's Sriperumbudur facility near Chennai is one of Hyundai's most technologically advanced plants globally, with versatile paint shops, stamping, welding, plastic injection moulding and engine shops. The company's second facility in Tamil Nadu produces powertrains including petrol and diesel engines along with manual and automatic transmissions. Hyundai also has one of its largest R&D centres in India with over 2,200 engineers working on vehicle development and testing.

Sales performance and growth trajectory

Headquartered in Gurgaon, HMIL has established itself as a formidable player in India's dynamic automotive market ever since it commenced operations in 1996. With two highly advanced production facilities located near Chennai, HMIL has an annual production capacity exceeding 820,000 units. The company manufactures popular car models like the i20, Verna, Creta, Venue and Tucson from these plants.

On the sales front, Hyundai has consistently held the position of the second largest car manufacturer in India after market leader Maruti Suzuki. In the fiscal year 2023, the company achieved record domestic sales of over 600,000 units along with robust export figures. However, Hyundai's market share in India has faced some pressures recently due to the rising competition from domestic automakers like Tata Motors and Mahindra & Mahindra. Financial results for FY2023 reflect HMIL's strong operational performance with net profit increasing 62.3% year-on-year to ₹4,709 crore. Revenues crossed the ₹60,000 crore milestone driven by higher capacity utilisation and rising SUV contribution. Operationally, Hyundai continues to invest in enhancing production capacities, new product development, network expansion and process improvements to boost competitiveness.

Countrywide sales and service network

A key factor behind Hyundai's sales success is its extensive dealership and service network in India spanning over 950 cities. With close to 1,300 sales outlets and over 1,000 service touchpoints, Hyundai has one of the widest networks in India's automotive market. From metros to Tier 2/3 cities, Hyundai's reach enables it to effectively cater to diverse consumer segments. Hyundai has also invested significantly in sales and service infrastructure and processes. Over 95% of its dealerships meet global HomNet standards in facilities, trained staff, digitalisation and customer experience. This has translated into sales satisfaction scores of 95% and service satisfaction scores of over 90% for Hyundai.

Financial growth and profitability

HMIL has demonstrated consistently robust financial growth with revenues, profitability and cash reserves all expanding significantly over the past few years. The company's revenues jumped from around ₹47,378 crore in FY22 to over ₹60,307 crore in FY23, reflecting a healthy growth of 27%. During the same period, net profit soared by 62.3% from ₹2,901 crore to ₹4,709 crore.

In FY23, Hyundai's total production reached 7.27 lakh units, up 20% versus 6.06 lakh units in FY22. Domestic sales grew 17.9% to 5.67 lakh units, while exports rose 18.4% to 1.53 lakh units. Operating profitability also improved to 12.2% in FY23, with expectations of 12.5-12.7% medium-term margins.

Competing with Maruti, Tata Motors and Mahindra

Hyundai faces its biggest challenge from Maruti which scores on scale, pricing power, low cost of ownership and brand appeal. However, Hyundai has been able to drive growth by leveraging its technology edge to launch feature-rich products like Creta, Venue and Ioniq before competition. Going ahead, Hyundai's thrust into EVs could disrupt industry dynamics and accelerate its growth versus rivals. Compared to Tata Motors, Hyundai is seen to have an edge in styling, after-sales service and brand image by customers. But Tata is fighting back strongly with well-packaged products like Nexon and Punch appealing to youthful buyers. Mahindra has also upped its UV game with models like XUV700 and Scorpio-N posing stiff competition in key SUV segments.

Conclusion

As Hyundai Motor India is marching to a landmark IPO, it is building various formidable strengths in manufacturing, distribution network, brand equity, financial performances, and competitiveness. With the Hyundai IPO on the horizon, the company is poised to enter a new phase of growth as a publicly listed entity. This association with the global Korean parent might give HMIL both the wherewithal as well as vision to further firm up its stronghold as one of the most admired and successful automotive firms in India.

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