labels: automotive, general motors india, hyundai motor india, toyota kirloskar motor
What ails the Elantra? news
23 September 2004

The Elantra is a great car at a great price yet its sales have been slipping. Mohini Bhatnagar reports

In the past year, the upper mid-size or D segment, which has been growing at 25 per cent annually, has witnessed increased competition with a number of high profile brands jostling for space in a limited market. Last year about 14,337 cars were sold in this segment, which includes the Toyota Corolla, Skoda Octavia, GM Optra and the new entrant, Hyundai Elantra. One can just about squeeze in the base version of the Hyundai Sonata as well. All these cars come priced in the Rs8-lakh to Rs12-lakh range.

The Camry, Opel Vectra, Mercedes Benz C Class, Skoda Superb, Honda Accord and Ford Mondeo priced between Rs15 lakh and Rs20 lakh qualify for the premium segment, also referred to as the upper D class.

Competition in the D segment, which had only the Toyota Corolla and Skoda Octavia till last year, intensified with the launch of the GM Optra last year and the Elantra this year. The entry of Elantra has, in fact, shaken up the segment in the past month and a half, with Hyundai Motor India (HMI) continuously taking potshots at Toyota and GM in the print media, accusing the latter of being lax on safety standards and offering inferior products to those offered in the US and European markets.

BVR SubbuIn spite of the consumer educative campaign, as HMI’s managing director BVR Subbu, calls its August ad campaign, which compares the Elantra, to the disadvantage of the Corolla and Optra Incidentally, the Hyundai Elantra has been losing the race for the top slot in its segment consistently for the past three months.

The Elantra, launched in April this year, topped this segment in May 2004 with sales of 885 units leaving Corolla behind at 757 units. From January to April the top slot was oscillating between the Corolla and Optra. A total of 2,912 D segment cars were sold in May this year.

In a little more than a month after Elantra’s launch in June Toyota Corolla was back on top selling 942 cars with Elantra in the third place with 701 units after the Chevrolet Optra with 804 cars. Skoda Octavia with sales of 560 units was placed in fourth place. This adds up to just over 3,000 units sold in June 2004. In July and August again, the Corolla topped the D segment with sales of 741units in August while the GM Optra came in second with 615 units sales and the Skoda Octavia finished fourth with 563. Elantra again came in third. A total of 2,020 units were sold in August in the D-segment.

Total sales in the executive segment from January to July were a little above 18,000 units — more than a 100 per cent jump from 8,800 cars sold in the same period last year.

Elantra’s 1800 cc petrol engine that develops 125 bhp with a heavy torque of 16.6 @4500rpm is no less than the Corolla’s 1800 cc, 125 bhp engine but more powerful than the Optra’s 1800 cc, 115 bhp engine. In weight however at 1200kg, the Elantra is heavier than the Corolla but lower than Optra’s and Skoda’s 1260 kg. The Elantra also comes conditioned for Indian roads with higher ground clearance at 185 mm against 180 mm of the Corolla, Optra and Skoda and has higher torque than its competitors at 16.6 @4500 rpm.

The Elantra, like the Optra has been positioned on the value for money premise at Rs8.7 lakh for the base GT variant against the 1.8-litre Toyota Corolla priced at Rs9.50 lakh. The 1.8-litre Chevy Optra is still more competitive at Rs7.89 lakh while the 2-litre petrol and 1.9-litre Tdi diesel Skoda Octavia comes for Rs10.54 lakh. Hyundai is also said to be mulling bringing in a 1.6 litre variant to fight the Optra.

The Elantra is also good value for money as its base variant packs in a huge number of features and is priced almost Rs one lakh lower than the base version of Toyota Corolla.

What could go against the Elantra are its looks. Dealers say car buyers don’t like the Elantra’s looks and some time ago Hyundai even had to change the car’s front grill to rev up its sales.

The Elantra is basically an older model, which has just received a facelift for the global markets. Its styling, interiors and exteriors, suffers from a dated look that goes against it. This apart, Hyundai’s cars have always had a funny look that has surprisingly worked in India. The Santro and Sonata are a case in point. While the Santro has a downright funny hunchback rear, the Sonata’s styling is excessively stately for its price. The Santro Xing and the new Elantra also seem odd at first look.

The new Elantra is mixture of the straight lines popular in Europe and the curves liked in the US and Asia. The plunging bonnet grille with chrome-lipping, clear-lens combination headlamps with matte-black lining — reminiscent of cars of the ’80s (instead of the usual multi-reflector type) combine to give it a old fashioned look that doesn’t appeal to the Indian buyer.

Against this Corolla and Optra look more attractive with flowing lines and subtle yet unpretentious looks.

Ostensibly apart from its looks the Elantra has everything going for it and should be selling far greater numbers than it is. It seems that Indian consumers knowing that they are getting inferior versions of the Corolla and Optra (claimed by Hyundai) still seem to prefer the latter. Analysts say the Indian market may be price conscious but it is so only at lower price points. In the premium segment, the domestic market behaves like its global counterpart where premium image and brand value counts for more than anything else.

In India and globally Toyota’s brand image is unmatched. Such is the Japanese company’s brand equity backed by technological superiority that its MUV Quali still tops the best-seller list despite an unimpressive design and solely on the basis of performance. General Motors also has impressive credentials with high profile brands like Chevrolet and Cadillac to name a few.

Hence the price product equation that worked for Hyundai in case of Santro and Accent now does not seem to be working for Elantra. Elantra’s greatest hope lies in its diesel version since other than the Octavia 1.9Tdi it does not have much competition. The diesel variant is also incidentally performing much better than its petrol version.

Industry sources say Hyundai Motor is soon expected to slash the price of the Elantra.

Hyundai officials say this won’t happen. They say Elantra’s sales in August were lower because the company halted its production in the first week of August to start production of the Getz. The Sonata, Viva, Elantra and the Getz are made on a common line, which currently has a production capacity of 1250 cars.

The company, currently battling capacity constraints, is expanding capacity. Officials say Elantra will have 40 percent local content by the end of 2004 after which it could slash Elantra’s price.

Till such time one can only wait and watch how it goes.

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What ails the Elantra?