Hyundai HA small car to compete with the Alto not Nano

Hyundai Motor India Limited (HMIL) is planning to add two new models to its portfolio every year in India and the HA small car could be their second model this year.

Hyundai’s new small car

Arvind Saxena, Director for sales and marketing, HMIL was quoted as saying by Bloomberg that Hyundai will launch a small car cheaper than the Hyundai Santro in the country. Related: Hyundai HA small car spotted testing in Chennai

Currently the Santro is priced at Rs. 2.93 lakh (ex-showroom, Delhi) and hence the small car could be around Rs. 2.5 lakh. Saxena mentioned that Hyundai has no plans to build a model that will compete with Tata Nano.

Hyundai’s upcoming small car (code named HA) was caught being tested in Chennai in January 2011. The heavily camouflaged test car hinted familiar Hyundai fluidic design and the company’s signature grille as seen on the new i10.

As per reliable sources, Hyundai HA (petrol) will be powered by a 3 cylinder, 814 cc engine that produces 45 hp of maximum power. Hyundai may also develop a higher variant of the HA and plonk in a 1.0 litre Kappa engine.

Hyundai’s i10 and i20 small cars are their chief volume drivers and its cheapest model, the Santro is still selling in large numbers. Hyundai has no direct product to take on the Maruti Suzuki Alto, the world’s largest selling small car (2010) which has prices ranging from Rs. 2.32 lakh – Rs. 3.17 lakh (ex-showroom, Delhi).

The sales of the Alto have been so strong that even Tata Nano, the cheapest car in the world, couldn’t beat its sales. By launching the HA, Hyundai will target Alto buyers as well as the Nano buyers provided the car is priced aggressively.

Hyundai’s small car vs. competition

While the company is developing the HA, Maruti Suzuki and General Motors (GM) India are planning a small car below Rs. 3 lakh price band. Maruti Suzuki has hinted that it is developing a ‘Made in India’ small car. GM India too could launch the 800 cc Chevrolet Spark and price it in the Rs. 2.5 – 3 lakh range to take on Hyundai’s upcoming HA.

Hyundai losing market share

The Korean carmaker’s Indian sales grew at only half the pace of the market in the last fiscal year (2010-2011) while Ford, Volkswagen and Toyota have added new models in their India product portfolio ( Ford Figo, Volkswagen Polo & Vento, Toyota Etios) and have also opened many new showrooms in urban markets.

The company is also plans to target the India rural market and will set up showrooms and service stations in these regions. Also read: Hyundai Motor plans 1000 rural outlets in India

“We are looking strongly at these (rural) markets and want to focus on growing our network there,” Saxena said.

He added that the urban markets will be more difficult to grow in and so, most automobile manufacturers will have to focus on rural markets. The company may build a sales and service network of as many as 1,000 rural outlets in India.

HMIL launched the new Verna on May 11^th with both petrol and diesel engine options. The new Verna will come at an introductory price of between Rs 6.99 lakh and Rs 10.75 lakh (ex-showroom Delhi). Considering the new Verna as model 1 this year, the second model for this year, could be Hyundai’s new small car.

Hyundai Diesel engine plans

Hyundai will invest Rs. 400 crore to build a new diesel-engine factory at its Sriperambadur plant near Chennai. The diesel plant will have a production capacity of 1, 50,000 units per year and will supply engines to Hyundai cars sold across the country.

It has to be noted that Ford India and GM India have also set their eyes on engine manufacturing plants. Manufacturing engines locally will help car makers reduce production cost and will help them price their cars competitively.