Hyundai's Marketing Strategies in India

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Case Details:

Case Code : MKTG095
Case Length : 16 Pages
Period : 1998-2004
Pub Date : 2004
Teaching Note : Not Available
Organization : Hyundai Motors
Industry : Automobile, Passenger Cars
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Price Cut Contd...

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 upgrading & 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).

Background Note

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...

Excerpts >>