India an important export hub for auto sector

Y.K. Koo, as Managing Director & CEO of Hyundai Motor India Limited (HMIL), is in the driving seat of one of the leading automotive giants in India. 'India Global Business' explores his vision for the Indian market, plans for the country as an exports hub and R&D plans for the region.

How important is India for Hyundai globally, as a market and as a production hub?

India has emerged as an important automotive market and offers huge growth potential for automobile companies. At Hyundai, our aim is to become our customers' lifetime partner in automobiles and beyond by providing new value and experience to customer beyond their expectation.

Over the past few decades, we have gained strong market leadership position with sustainable growth through consistent innovation, market research and widening our product portfolio through new launches equipped with new technology and features that are relevant to the Indian market. Exports are part of the global strategy which are based on the market demand of various countries. HMIL is a leading exporter of the passenger cars from India.

What is the update on HMIL's Made in India exports?

Hyundai is a global company. Exports are part of the global strategy which are based on the market demand of various countries. We have been the largest exporter for the last 13 years and exporting to 87 countries.

Hyundai has always been a big exporter of cars from India since inception. How has it helped the company?

For Hyundai Motor Company, HMIL plays a critical role in the global export department. HMIL currently exports passenger cars to around 87 countries across Africa, Middle East, Latin America, Australia and the Asia Pacific. Exports have been integral to HMIL and through great partnerships we have grown and strengthened over the years.

What is your outlook for India as an export hub for international passenger cars?

Hyundai Motor India's manufacturing plant is a state-of-the-art facility and Shining Example of 'Make in India, Made for the World' products. At the Hyundai plant, we manufacture world-class modern and premium products for our aspirational customers through continuous innovation, creating New Benchmarks through Super Performer Brands.

India has emerged as an export hub for automobile sector and over the last decade this success has grown manifold. The story will only grow in the coming years as demand for vehicles in emerging markets across Latin America, Africa and ASEAN increase. The supplier competencies developed here will be leveraged to meet the needs of these markets as customers in these countries are extremely price-conscious and this is where the cost structure developed in India will play a big role. India is well placed to become one of the most important automotive markets by 2020.

How has the R&D facility in Hyderabad contributed to growth?

Hyundai Motor India Engineering (HMIE), a modern R&D facility, is a fully owned subsidiary of Hyundai Motor Company, South Korea, located at Hyderabad with around 500 engineers working at various Hyundai products. HMIE is a centre with one of the most advanced research and development facilities which focuses on product and design engineering and rigorous quality enhancement.

The state-of-the-art R&D centre has been playing an important role in the entire value chain of Hyundai's business by supporting all back-end operations like computer aided engineering (CAE), computer aided design (CAD) and helping the R&D work taking place across Hyundai's car lineup. In addition, it provides vehicle development including styling, engineering design and vehicle test & evaluation for cars manufactured in India to satisfy the specific needs of the Indian customers.

Our R&D facility helps in building India specific details into our cars. Eon is one example where the R&D centre gave many inputs specific to India. For other markets, it is mainly inputs on safety features and design of certain components etc. The centre also supports our global R&D in Korea with India specific inputs. Our R&D facility in India works in close coordination with R&D in Korea.

How is the company countering the GST-triggered sales slowdown?

We have not witnessed any negative impact of GST implementation. While these are early days, we believe Hyundai will be one of the largest gainers post the GST. We have products ranging from Rs 3 lakhs to Rs 30 lakhs ($300,000-$30,00,000). While we were always strong in cars priced up to Rs 10 lakhs (10,00,000), GST will increase our presence in the 10 lakh plus segment, which now brings almost 20 per cent of our volumes through cars such as Creta, Elantra and Tucson. The price decrease makes the price value equation more favourable for these cars. From the logistics end too we believe there could be a reduction of 10 per cent cost going forward. The net benefit will go to the customers.

What are some of the future plans for Hyundai vis-a-vis the Indian market?

We have big plans for the Indian market for the next four years till 2020 for strong market leadership with sustainable growth. Our goal is to have a strong presence in the current and newer segment for the future. As part of our strategy, we plan to widen our product portfolio through new launches equipped with new technology and features that are relevant to the Indian market. Besides the introduction of new models, we wish to bring more of new model change, facelifts and hybrids to meet the evolving consumer needs. We will continue to introduce many contemporary concepts and designs thorough consistent innovation and strengthen Hyundai's image to adopt a modern premium brand direction and differentiate ourselves from the competition.

What policy hurdles would you highlight that remain for automotive firms like yours operating from India?

The year 2017 has been one of mixed fortunes for the Indian automobile industry amid a number of challenges. The implementation of demonetisation caused a temporary currency crunch and some uncertainties in the market but it will actually grow the market in long-term because everything will become accounted. Another major development has been the introduction of GST. GST rates on automobiles were on the expected lines and the auto industry has benefitted by reducing the overall tax burden by passing the net benefit to the customers.

The Indian government intends to graduate to an all-electric vehicle market by 2030. Is that feasible? What is Hyundai India planning in that area?

The government is underway on major pushes to expand eco-friendly vehicles in India and keenly working on the new schemes and policies to create a conducive environment for the roll out of all-electric cars. The government has started the Make in India programme, which allows the multinational manufacturing companies to develop their products in India. Having said that, for most manufacturers electric/hybrid commercial vehicles are mostly in the experimental stage.