By revenue, Hyundai Motor is the third-largest passenger vehicle company in India, behind Maruti Suzuki and Mahindra and Mahindra, with revenues of 60,310 crore in 2022-23 and 52,158 crore for the 9-month period ended December 2023. 

With 13 models currently, Hyundai India has an overall market share of 14.6% in passenger vehicles, just ahead of Tata Motors Ltd’s 14%, but well behind market leader Maruti’s 41.3%. Its operating margin at 9.1%, however, is ahead of Maruti’s. M&M is ahead of both, but its numbers include tractors.

But if there is one story the Hyundai prospectus tells, it is of the ‘premiumisation’ of the Indian passenger vehicle market in the last few years. The average price of a passenger vehicle has risen from 4.9 lakh in 2018-19 to 6.6 lakh in 2022-23. 

“Modern consumers in India are preferring mid-end or top-end version of vehicles, moving away from traditional fuel-efficient, budget-friendly small cars and towards higher-priced feature-loaded larger cars,” Hyundai says in its IPO document. A key outcome of this move to premium vehicles has been soaring sales in the sports utility vehicle (SUV) segment, which now accounts for over half the passenger vehicle market by volume, against 23% just six years ago.


The SUV story

The story of SUVs, which have higher profit margins, is of both demand and supply. As per Hyundai’s prospectus, the industry has launched over 30 SUV models in the last five years, compared with just four hatchbacks and three sedan models. On the demand side, passengers have come to seek the more ‘premium’ features associated with SUVs. Thus, the so-called ‘compact’ SUV segment (priced at 6-15 lakh) accounts for 57% of sales within the overall SUV category.

Between 2021 and end-2023, the share of SUVs in Hyundai’s total passenger vehicle sales rose from 45% to 62%. “In line with our premiumisation strategy, we expect SUVs to continue to form a substantial portion of our passenger vehicle portfolio and sales,” the company said in its prospectus. “Compared to other segments, the SUV segment is much more fragmented with no clear leader and very close competition between (original equipment manufacturers).” 

Hyundai had a 17.7% share in the SUV segment in 2022-23, and was ranked third.

The electric vehicle journey

Another story that will shape auto businesses—and shareholder returns from them—is the electric segment. If the Indian passenger vehicle story has been one of an accelerated shift towards SUVs, globally, the story is one of a shift toward electric vehicles, and the growing dominance and aggressiveness of Chinese EV makers. 

In India, EVs accounted for just 2.3% of passenger vehicle sales in 2023-24. Market share in the EV segment has been shifty. M&M dominated till 2019. Tata Motors then surged ahead with the introduction of its Nexon, followed by Tiago, Tigor and Punch. In 2023-24, Tata Motors stood out with a 71% share of India’s EV market, while Hyundai’s share was around 2%.

Hyundai will be the second pure Indian passenger vehicle business to list on the stock markets, after Maruti. Tata Motors and M&M are listed, but they also sell commercial vehicles and tractors, respectively. Over the past 5, 10 and 20 years, all three companies have generally outperformed the benchmark BSE Sensex.

Can Hyundai dominate in SUVs?

The investment case for Hyundai pivots around SUVs. Between 2018-19 and 2023-24, the segment grew at an average annual 23%. By comparison, multipurpose passenger vehicles (MPVs) grew at 14%, and hatchbacks, sedans and vans in single digits. 

Between 2023-24 and 2028-29, Hyundai expects SUVs to grow at 7-9%, followed by MPVs at 6.4-9.4%. In sharp contrast, hatchbacks and sedans are not expected to grow beyond 2%.

Hyundai’s prospectus, quoting CRISIL MI&A, forecasts the industry’s average growth at 4.5-6.5% per year between 2023-34 and 2028-29, selling 5.2-5.7 million vehicles in the domestic market. By 2028-29, SUVs are expected to account for as much as 60% of the passenger vehicle market, followed by hatchbacks, whose share is expected to fall from 28% currently to about 21-23%. 

For investors, the question is whether Hyundai, which has been a steady third in SUVs, can continue to hold its own, if not dominate the fast-growing segment. is a database and search engine for public data

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