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AH2: The code that could get Hyundai more legroom in India

ET Online|
Updated: Oct 11, 2018, 10.19 AM IST
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Hyundai-reutes
After Maruti 800, Santro is probably the most popular car in India
Twenty years after Hyundai Motor India Ltd (HMIL) launched its first car — Santro — which was a runaway success and gave the Korean automaker a strong footing in the Indian market, it's trying to ride on the past success. India's second largest manufacturer will be bringing back its popular hatchback Santro later this month.

After Maruti 800, Santro is probably the most popular car in India. The 'tallboy' model that promised more headroom as well as legroom became a household name. It lured a huge number of buyers who were upgrading from Maruti 800. In 1998, the Santro sold 8,448 units.

At its peak in 2006, its annual sales were 140,679 units. In 2014, during its run-down phase, it still sold 29,982 units. After retiring Santro, Hyundai did not have any volume churner in its portfolio. Now with the new Santro, it hopes to plug this gap.

In a first for Hyundai, Santro will offer in-house automated manual transmission or AMT technology and will also come with a factory fitted CNG variant. "The overall design theme of Contemporary Family car AH2 is based on “Rhythmical Tension” that exudes a Refined yet Sporty Image with Modern Appeal," the carmaker said in a statement.

"The AH2 is a Modern Tallboy Concept, that is aimed to target family buyers who seek utmost comfort with spacious cabin feel for the entire family without compromising on styling."

Twenty years ago, when Santro became an instant success, a lot of kids saw their parents bringing in a Santro. They are now adults and prospective customers. HMIL could be aiming to cash in on the emotional recall of this large segment of customers.

The new Santro will compete with Maruti Suzuki's WagonR, Celerio and Tata Motors' in the mid-compact segment. Currently the market size is 30,000 units in this segment and with the production of 8,000-10,000 Santro units a month, Hyundai is targeting a 25-30% market share.

“The A segment [entry-level segment] contributed 24% to total vehicle sales in FY14, which dipped to 17% in FY18. Maruti’s share has continued at 74%, while the Hyundai cars Eon and Santro accounted for 22% in FY14. In FY18, Hyundai’s share dropped to 11% due to the discontinuation of the Santro. The Renault Kwid held a share of 19% in FY17 and 15% in FY18,” Bharat Gianani, a research analyst at brokerage firm Sharekhan, told ET Prime.

The subplot behind the slide in the entry-level segment is a shift in the behaviour of first-time buyers, who were historically the key drivers of this market, says the ET Prime report. They have been rapidly upgrading to mid-size, better-designed models that offer more features at a slightly higher premium.

According to the report, HMIL couldn’t have chosen a better time to bring back the Santro: about 200,000 customers are growing away from the Maruti Alto every year and need a choice a step below the premium Maruti Dzire and Honda Jazz. This is a significant opportunity for Hyundai.

“If the Santro brand maintains its same aura of timely delivery, versatility, space, and technology, chances are that it will generate similar sales volumes as the earlier model,” says Arvind Saxena, former director, marketing and sales, and board member of HMIL, who joined the company in 2006 when the Santro was at its zenith, told ET Prime.
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