Hyundai Santro slows to make way for big cars

Sales of Santro, once a runaway bestseller whose tall-boy design changed the dynamics of the small car market, have slowed in recent months. Is it just a reflection of current trends?

Hyundai’s tall-boy Santro, once the racehorse in its stable, hasn’t been having a great run lately. Between June 2020 and July 2020 sales dropped by 11 per cent; if we step back a little — between July 2019 and July 2020 — the drop was sharper at 75 per cent.

This, when mass-market carmakers registered sales of 197,523 units last month, a tad short of July 2019 numbers but a substantial 69 per cent increase over June 2020 figures of 116,969 units.

Hyundai reported domestic sales of 38,200 units in July, only a 2 per cent decline year-on-year. The company said the Grand i10 Nios, the Venue, 2020 Verna and Elite i20 helped it post strong numbers in July, with the new Creta, launched just days before the nationwide lockdown in March, leading the charge. It was the best-selling passenger vehicle in May and the second-best-selling in June 2020.

So why has Santro hit this speed bump? Some dealers said the company’s focus is on bigger cars now because they offer better margins. But the company says it would be wrong to say the focus has “shifted”; it is just that new launches take up a lot of resources and they tend to boost overall sales figures. And that’s the focus right now — keep the numbers and employee morale up. Hyundai has relaunched four of its products — Aura, Creta, Verna and Tucson — since January this year.

That’s fine, but Santro’s slide looks stark if we consider the brand’s run just a year ago. In 2019, Hyundai’s Santro hit two milestones. In April last year, it outsold four of its main rivals, logging 6,906 units. Rivals Maruti Celerio, Renault Kwid and Tata Tiago clocked 6,668, 5,336 and 5,309 units respectively.

At that time the company indicated it was developing an entry-level Santro variant to expand the customer base, and also replace the slow-moving Eon.

 

Then in October 2019, Santro hit another huge high, selling 5,855 units. But its sales in the next two months were uninspiring — 3,851 in November and 3,829 in December. It did pick up in February 2020 (4,200 units) but May, June and July numbers look distressing — 157 in May, 1,513 units in June and in July 1,351 (the Covid-19-related slowdown may have something to do with this performance).

Santro’s performance is a bit of a damper also because of the fact that the 20-year-old car was relaunched in November 2018 amid much hoopla. Priced between Rs 3.89 lakh and Rs 5.45 lakh (ex-showroom), its design theme was in line with other, more modern Hyundai models. The cabin was packed with cutting-edge features, among which its 7-inch touchscreen infotainment setup with multiple smartphone connectivity apps was deemed the killer. Given the flagging sales of the Eon, the South Korean automaker’s decision to revive the Santro brand was understandable.

But has the Santro lived up to the expectations? “Not really,” says auto analyst Murad Ali Baig. “Unlike the time it was first launched, we now have many other cars to choose from that are equally fuel-efficient and price-competitive. Plus, over its 20 years, the Santro lost its ‘cute’ edge.” The new design, Baig said, doesn’t have that 1998 “X factor”. “It ticks all the boxes but does not have the same personality,” he adds.

Positioned between the Eon and the Grand i10, the new-gen Santro did post good numbers to start with despite the competition in the teeming Indian hatchback segment. In fact, its April 2019 high coincided with the time when the Indian auto industry saw a rapid decline in sales. That month, while market leader Maruti Suzuki had suffered a 19.6 per cent YoY decrease in sales, Hyundai had kept the drop in check — to just over 10 per cent.

Since then it has been a mixed bag. By Baig’s assessment, Santro’s biggest rival might be right there — in Hyundai’s own stable in the form of the Grand i10 Nios. “It is bigger, it has got everything the Santro has and it’s new.” In the auto market, anything “new” piques buyer interest and can make all the difference to a brand’s sales numbers.

Another factor contributing to Santro’s muted numbers might be the slowing demand for passenger cars from rural markets. Yes, you heard it right, while the rural markets have posted robust demand recovery since June, the segments that led the charge were tractors, followed by two-wheelers and small commercial vehicles.

Sales of Mahindra & Mahindra’s (M&M’s) farm equipment were representative of the broad trends in the market. The company reported 12 per cent year-on-year growth in tractor sales at 35,844 units in June 2020 compared to 31,879 in June 2019. This is the second highest June sales ever, the company had said. 
 

Hemant Sikka, president of M&M’s farm equipment sector, had said in an earlier interview, “The timely arrival of the south-west monsoon, combined benefits of a record rabi crop, government support for agri initiatives and very good progress in kharif sowing have led to positive sentiments among farmers.”
 

Unfortunately, though retail sales of certain segments of the auto market improved in June, the first full month of economic activity after an extended nationwide lockdown, that recovery did not reflect in the overall passenger vehicle sales.

“But don’t write off the Santro already,” warn analysts. “Cars like the Santro or the Verna have tremendous badge value.” Plus, the company is in no mood to phase it out anytime soon.