The country’s second largest automotive brand Hyundai Motor India Ltd recently launched its premium hatchback i20 N Line at a starting price of ₹9.84 lakh (ex-showroom). The South Korean company has been rolling out new vehicles at regular intervals to keep not only create excitement in the market, but also to become a dominant player eventually in different segments. Tarun Garg, Director – Sales, Marketing & Service, HMIL, spoke to BusinessLine about the changing consumer trends, the company’s efforts in creating new segments for volume growth. Excerpts:
How is the premium hatchback segment doing and what are your expectations from N Line?
For us, everything starts with customers. We have been studying customer trends very closely before launching a new product. In hatchbacks, the premium model’s share (hot hatchbacks that we call) is now 30 per cent of the total hatch market. This used to be 10 per cent a decade ago. With little less than one-third, it is the biggest segment. This implies that clearly the Indian customers are evolving. Now, buyers are looking for styling, designing and features in hatchbacks. Also, in the past three years, we have noticed that Hyundai customers have been getting younger. The 25-30 age group — so called millennials — used to contribute 24 per cent to our total sales in 2017. Now, this segment accounts for 36 per cent of our total sales. So, the market is seeing a shift and so are the Hyundai customers. This is where we believe N Line, incorporating several new features, is a right product to launch now.
Who are the typical buyers of premium hatchback?
They are the younger lot. In the premium hatchback segment, about 52 per cent are first-time buyers. So, first-time car buyers are also evolving in India. For example, the average age of Hyundai i20 buyers is 2-3 years younger than the average age of Hyundai customers. Also, more than 34 per cent i20 customers are first-time buyers. The top two trim variants of i20 used to be 18 per cent of its sales in 2018-19 and now it is 36 per cent. While the share of top two variants continues to increase, our accessory sales have also doubled in the past one and half years. Although the customer has top trim, he still wants more accessories and that is the aspirational level in this segment.
What do these developments in the hatchback segment indicate? Are buyers no longer price-sensitive?
As I said, Indian buyers, including the entry level car buyers, are really evolving and what I mean is that they are becoming more value-conscious than price-conscious. By value, I mean, preference to latest technology and features because today’s customers are always a connected. For example, we launched BlueLink connectivity in 2019 with our compact SUV Venue. Today, more than 33 per cent of our customers are choosing cars with BlueLink and seven of our models offer this. While premium hatchbacks come with rich features, they are also carrying powerful turbo engines in line with customers’ expectations. So, the value proposition is a combination of sporty features and power as young want the thrill of adrenaline rush.
Aren’t you worried over cannibalisation of products?
No, it will only expand the market. Also, as long as we get new customers, it is fine. Meanwhile, we have stopped looking at cannibalisation. When we launched premium SUV Alcazar, everyone said it would cannibalise Creta. But it has not happened. Creta is sustaining its volumes while Alcazar is bringing an incremental new range of customers. Any new product always adds to the total kitty of the company. Our approach has always been exploring sub segments based on our own research outcomes. After that if the company comes out with the right product, supported by a good and accurate communication on value proposition, it will be accepted. Who would have thought Hyundai will become the SUV market leader. Own research, right product and with right value proposition will make a brand stronger.
Which will be fast-growing segments going forward?
SUVs are definitely a big market now as they account for about 36 per cent of the market, up from 13 per cent in 2015. There are some clear trends emerging. Volumes of SUVs and premium hatchbacks are going up. Of course, sedans will have its own segment of buyers depending on the products since India is a very large market with diversified customer preferences.