Hyundai to hike Exter SUV output to capitalize on void in India

Hyundai Motor Co. plans to ramp up the production of its compact sport utility vehicle Exter in India to capitalize on the void in the entry-level SUV market in the South Asian country.

Hyundai, South Korea’s top automaker, said it will manufacture 8,000 units of the Exter SUV a month by the end of the year, up 33% from the current 6,000 units.

The hike in local production of the affordable SUV comes as the model is in high demand from Indian drivers given its feature-packed specifications, including six airbags as the standard and an optional sunroof.

Hyundai has received orders for more than 75,000 Exter SUVs since the model’s launch in early July at a price of 5.99 lakhs of rupees ($7,211). With that sales figure, the Exter is the second best-selling SUV in India after Tata Motors’ Tata Punch.

To help ease the nine-month order backlog of the Exter, built on Hyundai’s Casper crossover city car platform, the Korean carmaker is also considering diverting some export volumes for local sales.

The popularity of the Exter will likely boost Hyundai’s market share and profitability in the high-margin SUV segment in India, the world’s third-largest car market after China and the US, company officials said.

CRETA, GRAND I10 NIOS

Hyundai’s other vehicles such as the Creta SUV and the Grand i10 Nios hatchback are also so popular that consumers have to wait for at least six months to receive an ordered vehicle.

With about 4.76 million car sales in the domestic market last year, India is the world’s No. 3 auto market and among the fastest-growing EV markets in Asia.

India is also the world’s most populous country with 1.43 billion people, surpassing China earlier this year.

Currently, Hyundai and its affiliate Kia Corp. are together the No. 2 carmaker in India, controlling a fifth of the market, only behind top carmaker Maruti Suzuki India, the local unit of Japan’s Suzuki Motor.

Last year, Maruti Suzuki sold 1.58 million vehicles in India, followed by Hyundai and Kia, which sold a combined 807,067 units, and Tata Motors.

In the first seven months of this year, Hyundai sold 346,711 units, or 49,530 vehicles a month on average.

Hyundai operates a plant in Chennai, dubbed the Detroit of Asia, with an annual production capacity of 820,000 vehicles.

Last month, Hyundai signed a deal to take over a GM car manufacturing plant in Talegaon, Maharashtra. Hyundai expects to increase its output capacity to 1 million units with the acquisition of the GM factory and more investment.

The Korean company said in May that it will invest 200 billion rupees ($2.45 billion) in the Indian state of Tamil Nadu over the next decade to strengthen its presence in India, which works as Hyundai’s Southeast Asian hub.

PREMIUM MODELS: NEW TARGET SEGMENT

Exter's success is a green light for Hyundai Motor's profitability improvement. With the launch of the Exter, the carmaker saw its sales proportion of high-margin SUVs increase to 64% from 54% in June.

Buoyed by the Exter and two steady sellers, the Creta and Venue, Hyundai’s share of the SUV market in India has risen to around 20%.

Industry officials said Indian consumers’ preference for premium models over traditionally favored two-wheelers and light vehicles also bodes well for Hyundai.

Tarun Garg, chief operating officer of Hyundai Motor India, said in a recent interview with local media that about 75% of the Exter sold in the country are equipped with a sunroof.

To meet growing demand for high-end models, Hyundai plans to launch more vehicles equipped with the advanced driver assistance system (ADAS) and other safety functions.

“Maruti cars often come with minimum basic specifications,” said an industry official in India. “The carmaker’s market share once hovered around 50%, but now it’s well below that.”

Hyundai aims to sell more than 600,000 vehicles in India this year, up 8.6% from 552,511 units in 2022.

The growing popularity of Hyundai SUVs is good news for the Korean automaker, which aims to enhance its presence in India as well as in other countries in the region, including members of the Association of Southeast Asian Nations (ASEAN).

Its focus on the Southeast Asian market will also make up for its snowballing losses in China and Russia, industry officials said.

Write to Nan-Sae Bin at binthere@hankyung.com

In-Soo Nam edited this article.