Hyundai gets high-decibel to increase sales

08 Apr 2005


What Hyundai Motors calls a public interest campaign, critics dub as a corporate interest campaign. By Mohini Bhatnagar

The small car segment is seeing some action with Hyundai Motor India upping the ante against rival Maruti Udyog in the small car segment.

In the recent past, the Chennai-based subsidiary of the Korean car major has been running an aggressive print and radio ad campaign against market leader Maruti Udyog''s small cars Alto and more specifically the Wagon R, dubbing them as four-seaters, since they have just four seat belts in the car.

Hyundai Motor''s campaign for Santro cautions buyers to ascertain the seating capacity of a small car before buying it has kicked off a controversy. Hyundai''s assertion in its campaign that Santro has been certified as a five-seater by the Automotive Research Authority of India (ARAI) forced the homologation body to protest being dragged into what Balraj Bhanot, director of ARAI says is "Hyundai''s marketing gimmick."

In a telephonic conversation with domain-b, Bhanot said, "ARAI has certified a number of small cars as five-seaters including the Maruti Zen, the Tata Indica and the Hyundai Santro."

Bhanot said, "We don''t want to be associated with this campaign. We asked ARAI to be clearer about which cars are being referred to as we felt that that the ad implied that Santro is the only five-seater model in the compact car segment."

Automobile industry sources said that the seating capacity of a car is certified by ARAI based on the Central Motor Vehicle rules and after considering the various aspects such as dimension and safety aspects, when a vehicle is sent for homologation.

According to Bhanot, the certification by ARAI is given based on the rear capacity of the car, since the front has specified two seats, and the number of seats and seatbelts given for the passengers."

The Santro has a width of 1525mm while MUL''s small cars Zen, Wagon R and Alto are each 1495mm wide. Hence Santro buyers stand to gain a tiny 30mm from buying the car. Funnily enough, the Zen, which is also 1495 mm wide, has also been certified by ARAI as a five-seater while the Fiat Palio, also certified by ARAI as a five-seater, is 1620mm wide. According to Bhanot, "Apart from width, we use other parameters for certifying cars as five-seater such as the number of seats, overall capacity and the number of seatbelts available for passengers."

Industry experts say the crux of the matter lies is in the number of seats and seat belts available in the cars. According to Maruti dealers, the WagonR has been certified to seat four persons, including the driver. This could be because the WagonR has split seats at the rear and hence has seat belt points for two persons in the rear.

According to B V R Subbu, president, Hyundai Motor, consumers are not clearly informed about the seating capacity of cars as certified by ARAI which could create problems if traffic regulators raise objections for carrying more than four people (including the driver) in a four-seater car. He said Hyundai had issued the campaign in public interest.

Further, according to him, carrying five people in a four-seater car would deny the safety of a seat belt for the fifth passenger — the person seated in the middle in the back. Seat.

Hyundai officials also said the company did not plan to take the issue with transport authorities and that the intention of the campaign was only to educate consumers.

In a country like India where cars owners are happily oblivious and uncaring of such seating rules and traffic authorities unwilling to enforce them, such concerns seem a trifle misplaced.

However industry experts say the campaign puts pressure on buyers, owing to issues related to traffic rules and could force some buyers to opt out of buying the Wagon R or the Alto.

Hyundai''s campaign targets the innate preference of Indian buyers for roomy cars by creating hype around the seating capacity say industry insiders. They say that though the campaign tries to pass off as a passenger safety campaign, Hyundai is essentially trying to improve the market share of Santro through the campaign, they say.

Thus far MUL has kept quiet and refused to be dragged into the controversy.

At the heart of the matter is the fact that Hyundai''s sales have been falling in the past few months and it has been steadily losing market share to MUL''s Wagon R and the Alto.

In the year ending March 2005, Hyundai Motor posted cumulative sales of 2, 24,243 cars a growth of more than 30 per cent over the previous year. The accent was on exports as domestic sales registered a rise of 9.5 per cent with the sale of 142,150 cars. Exports grew by 95 per cent in 2004-05 over 2003-04. In March, this year, Hyundai recorded its highest ever, cumulative sales of 23,669 units — a growth of 23.2 per cent over March 2004. This figure doesn''t look as bright for the domestic market where Hyundai achieved total sales of 16,315 units, a growth of 18.3 per cent over March 2004. The company''s exports for the month stood at 7,354 units, growing by 36 per cent over the corresponding month in 2004.

In comparison, Maruti Udyog sold 5,36,301 vehicles during 2004-05, a growth of 13.6 per cent over the previous year, the largest number of cars sold since it commenced operations two decades ago.

In the B segment comprising the Alto-WagonR and the Zen it''s sales were up 47 per cent in March and 54 per cent for the year.

In March 2005, MUL sold a total of 54,613 cars, including 3,920 units of exports, the highest ever in a month by the company. Further, March 2005 sales figures were shocking for Hyundai India when its Santro sold 11,833 units against the Alto''s 14,577 units, a 23 per cent difference.

Santro and Matiz were launched in the country in 1997. Daewoo Motor''s troubles led to the demise of its small car, the Matiz, and the Hyundai Santro ruled in a monopoly market till the Alto and the WagonR were launched in 1999.

In the last six months high decibel marketing moves, coupled with exciting promotions and offers, have turned Alto into the largest selling car in the country. In February 2005, WagonR''s sales were higher than the Santro''s and in March the Alto stole, too, the Santro''s thunder.

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more