Korean brands have had their share of hits and misses in India

Steering success Hyundai has completed 20 years in India and emerged the first serious rival to Maruti Suzuki   -  THE HINDU

South Korean President Moon Jae-in with Prime Minister Narendra Modi   -  The Hindu

Hyundai has clicked while Daewoo collapsed and Kia promises plenty

When South Korea’s President, Moon Jae-in, came visiting early this week, it marked another important step forward in strengthening ties with India. The bonhomie with Prime Minister Narendra Modi, and the inaugural of the Samsung mobile plant, the largest of its kind in the world, drove home this message with a lot of vigour.

In the auto space, South Korea has been an integral part of the India journey since the time the country opened its gates to investments from multinational carmakers. Daewoo was among the first to enter the country though it was Hyundai that ended up being a force to reckon with eventually.

Its group company, Kia Motors, also has aggressive plans lined up for India, with its first product scheduled to be launched towards the latter half of 2019. The other Korean entity, SsangYong Motor, was acquired by Mahindra & Mahindra in 2011 and the two have been working quite successfully on building synergies.

Today, Hyundai has completed 20 years in India and emerged the first serious rival to Maruti Suzuki. When it first announced its entry, not many people were familiar with the name. It was also part of a parade that included better-known global brands like General Motors and Ford.

Yet, Hyundai triumphed while many others continue to struggle with single-digit market shares or have chosen to exit, with GM being the latest casualty. India has now been elevated as one of the regional headquarters for Hyundai globally, which is an acknowledgement of its importance in the overall roadmap.

However, it was Daewoo that first caught the fancy of the market, with the Cielo and later the compact Matiz. The Korean automaker was one of the earliest entrants with Peugeot and it is a tragic irony that the two were also the first to bow out. In the case of Peugeot, headquarters in Paris decided enough was enough just when a turnaround strategy was being formulated.

In the case of Daewoo, its parent company went bust in Korea and there was just no way the Indian operations could stay afloat. In all fairness, the management did its best to keep morale high by striving to hang in there but the writing was clearly on the wall.

First, it was Ford which emerged as the knight in shining armour with the highest bid but later backed out of the race in 2000. In stepped GM which, till that point in time, had a solid partnership going with Suzuki worldwide and was tipped to leverage this in India too.

Eventually, GM bought out Daewoo and the India chapter also came to an end. The Surajpur plant in Uttar Pradesh, which was home to the Matiz, now shut its gates marking an end to what could have been a promising tenure. GM did try to acquire the facility which would have complemented its operations in Halol, Gujarat, but nothing materialised eventually. However, there is no question that the Daewoo acquisition helped GM immensely in making cost-competitive cars for the Asia-Pacific region as well as developed markets. The Korea base with the rebooted GM Daewoo spearheading operations turned out to be the best thing that happened to the American automaker.

Santro comeback?

Hyundai did not face any such headwinds and proved with its first India offering, Santro, that it was not going to be an easy pushover. The company roped in Bollywood star Shah Rukh Khan as its brand ambassador and this partnership is still going strong after 20 years.

The Santro debuted at the 1998 Delhi Auto Expo at a time when the Tata Indica was the showstopper. Yet, it was this Hyundai model which grew from strength to strength and proved that it could more than hold its own in this intensely competitive market.

Sure, Maruti Suzuki continues to be the leader but Hyundai has shown what it takes to be a serious challenger. It worked relentlessly on creating a robust supplier base while focusing on cost-control through aggressive localisation.

Over the years, it has stood out for modern contemporary products which have all hit the bullseye, right from the i10 and i20 to the Xcent and Creta. Shipments out of India have also been an integral part of the business plan and this Korean carmaker has come a long way since its Santro days. Interestingly, the brand which was pulled out of production is now poised to make a comeback in a completely new avatar later this year.

As for Kia Motors, it has opted for Andhra Pradesh as its manufacturing facility and its debut SUV will roll out next year. It has always been a million-dollar question why it chose to come so late but if the crowds at its pavilion in the 2018 Auto Expo were any indication, Kia seems to have won the battle even though the real war is still sometime away.

This Hyundai group company will have to contend with an entirely new set of buyers who are radically different from those who queued up for the Santro two decades earlier. Today’s young Indian is more affluent, travels around the world and is hyperactive on social media. He/she is also familiar with the Kia brand in other parts of the world and knows what it stands for in terms of styling and design.

It is these inherent strengths that the company will focus on while making inroads into the Indian market. There will doubtless be cost synergies with Hyundai but beyond that it will be a battle royale at the frontal retail end with no holds barred.

Kia will be doubly keen on making the kind of impact that Hyundai did with the Santro even while the landscape has changed dramatically since then. The other interesting part about Kia is that it announced its India entry plans around the time when GM also made known that it would no longer be selling cars here.

As for SsangYong, it was in dire need of a lifeline which came in the form of M&M seven years ago. There has been a lot of time and money spent on its turnaround and the partners have been working hard on synergies in platforms and sourcing components.

The Tivoli platform will now be used for M&M’s new S201 scheduled for launch during the course of this year. The Y400, likewise, is the high-end vehicle that will be the replacement for the Rexton. This platform-sharing strategy is helping from the viewpoint of keeping costs in check and this is where both M&M and SsangYong are hoping to reap the benefits.

The Korean experience in India has seen super success stories like Hyundai and serious setbacks like Daewoo. Kia has the potential to be a game changer though this will be known only towards end-2019 when its debut offering will have hit the market.

Published on July 12, 2018
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