Marketing Management – In August 2004, a leading business newspaper reported that HyundaiMotors India Limited (HMIL)

UpdatedDecember 12, 2024

Q.2 Case study
In August 2004, a leading business newspaper reported that Hyundai Motors India Limited (HMIL), an Indian subsidiary of the South Korea based Hyundai Motors Company (HMC)3 was expected to reduce the price of its flagship car – Santro – by as much as Rs 40,000. Industry experts were expecting a reduction in Santro’s price in response to the price war being waged by the market leader in India – Maruti Udyog Limited (MUL),4 which had reduced the price of its largest selling car in the B segment – Alto – by Rs 58,000 in two price cuts starting from September 2003. This move had resulted in Alto replacing Santro as the largest selling car in the B segment
in the period January to June 2004 (Refer Exhibit I for the market segmentation of the Indian car industry). Marketing Management – In August, Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies Rebutting the report on price cuts, HMIL’s managing director, BVR Subbu (Subbu) said, “We are not cutting prices on the Santro. We have allowed our competitors
the prerogative of cutting prices.”5 Several dealers of HMIL also felt that the company would not reduce Santro’s price as it had not adopted such tactics earlier.

Santro had been the most successful product of HMIL and was also the largest selling car in the B segment till the fiscal year 2003-04. Introduced in late 1998, Santro had emerged as the second largest selling car in India after MUL’s M800 and had retained its position till March 2004 (Refer Exhibit II for the total units and value sales of the top eleven car models in India).

In mid 2004, HMIL with its four models, Santro, Accent, Sonata and Elantra, was the second largest car company in India with 19% market share in the industry. The company was planning to launch another model, ‘Getz’, in September 2004. Analysts attributed HMIL’s success to its ability to launch technologically superior products and its innovative marketing strategies. However, they
expressed concerns that the company relied heavily on Santro and any fall in demand for that model would hit the company.

It was felt that the introduction of new cars by the competitors and pgrading & price reduction of existing cars in the B segment would affect Santro’s sales. This would lead to a loss in Santro’s market share. (Refer Exhibit III for the comparison of features of various models in the B segment). For a long time after India became independent in 1947, the car market had just two models to offer – the sturdy ‘Ambassador’ from Hindustan Motors (HM) and the sleek ‘Fiat’ from Premier Automobiles (PA). This was the result of Government of India’s (GOI) decision to keep the car industry tightly protected. For HM and PA, the GOI dictated as to what type of vehicle the two companies should manufacture. No other domestic or foreign car manufacturer was allowed to enter the Indian car industry. The restriction on foreign collaboration led to poor technological improvements in Indian cars. As a result, car prices remained high while quality was inferior. This affected the growth of the industry. The demand for cars in 1960 was 15,714 units and in the next two decades, this rose to 30,989 units, which meant that the Compound Annual Growth Rate (AGR) was just 3.5 per cent.

In the 1980s, the GOI felt the need to introduce an affordable small car, targeting the Indian middle class. As manufacturing a small and affordable car required better technology than was available indigenously, the government tied up with the noted Japanese company, Suzuki. The government formed a joint venture with Suzuki and founded Maruti Udyog Limited (MUL). It held 74% and Suzuki got 26% equity stake in MUL. In 1983, MUL launched the ‘Maruti 800’, priced at Rs 40,000 Hyundai’s Entry in India One of the major players that entered the Indian car market was HMC through its subsidiary HMIL. Before making its move, the company closely studied the industry for a year. The company’s officials talked to vendors, dealers and customers to get a thorough knowledge of the industry…

Marketing Management – In August

Marketing Santro: Santro received an encouraging feedback from customers who appreciated its unique design that gave more headroom and facilitated easy entry and exit… Launch of Accent: By mid 1999, the major players realized that the ‘B’ segment would be the fastest growing in the car industry. To cash in, Telco re-launched its ‘Indica’ by introducing several new features and solving the glitches in the original model…

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies Repositioning Santro By late 2002, the competition in the B segment had increased significantly. MUL’s Alto which was launched in October 2000 had received a good response. Although HMIL’s Santro remained the largest selling car in the B segment, MUL commanded the largest market share in this segment due to the combined sale of its three cars – Zen, Wagon R and Alto… Status
in 2004: The financial year 2003-04 ended on a positive note for HMIL.

The company achieved revenues of Rs 50 bn and profit after tax (PAT) of Rs. 1.90 bn in the financial year 2003-04 compared to Rs 43 bn revenues and PAT of Rs 1.65 bn in the fiscal 2002-03…

Marketing Management – In August

Question:
(10 × 2 = 20)

Compare and contrast the marketing strategy of Hyundai with other leading players in the Indian passenger car industry.?

Examine and analyze the marketing mix of Hyundai Motors in the Indian passenger car industry.

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