Will get stronger in compact segment with new Santro: Hyundai's Y K Koo

South Korean carmaker Hyundai, the second biggest player in the domestic car market, on Tuesday strengthened its presence in the compact segment by launching the new Santro, four years after the old model was discontinued. Priced Rs 389,900 onwards, the car will compete with rival Maruti Suzuki's Wagon R and Celerio, among other brands. The company has spent Rs 7.4 billion in developing the car, and expects to sell 8,000-9,000 units a month. In an interview with Ajay Modi, Hyundai Motor India Managing Director and Chief Executive Officer Y K Koo speaks about the new product, the market challenges, and growth prospects. Edited excerpts:

How has the compact car market changed since the first Santro was introduced two decades ago?

The compact segment is still large, bringing about 40 per cent of the industry sales. Earlier, it was 60 per cent and it is still a volume segment though the share has come down. In the compact segment, we have categories such as low, mid, high and premium. 

The Santro was phased out four years ago and we lost our position in the mid-compact segment. We are not a strong leader in this. But, I am very sure that we will emerge a strong leader following this launch. 

Will you continue with the Eon? Does it not require a substantial makeover to meet the new norms a year from now?

We will continue with the Eon because its positioning is different. Investment will be required to make it comply with the upcoming safety and emission norms. 

We have kept a price gap among the Eon, the Santro and the Grandi10. There may be a marginal cannibalisation, but we have distinct positioning for each of these vehicles. 

What made you brand this new car as the Santro?  

Everybody remembers the Santro. We did customer profiling, spoke to dealers and influencers, and most of the participants suggested the name should be Santro. With this name, we can save huge marketing costs. We have 23,500 pre-bookings for the car in 13 days even though these customers did not know the price. That is not a joke, and all bookings came online. It is almost three months of the production volume for the car. 

The last Santro sold 1.32 million units in India. Can we expect this to be a bigger success than the previous one?

Times have changed. But all I can say is that the new Santro will support Hyundai's growth. It is targeted at the entry level segment and first-time buyers, besides families who want a second car in their house. 

What feedback are you getting from the market as growth has been missing this festive season? 

In September last year, we had all the major festivals. The market is similar to last year. However, this time the festive season is in October and Diwali is in November. Unfortunately, the industry has declined in the last three months. In October, we hope the market will stage a comeback.

What are your concerns? What growth can be expected this financial year?

Petrol and diesel prices are quite high. This might hurt the market sentiment and growth. It does not have a direct impact, but it does reduce the purchasing power, and some buyers seek to postpone purchases. The market has grown by almost seven per cent till September. I think this rate will be maintained. The seven per cent growth is not bad. I expect the industry's annual growth to range between seven and eight per cent. We at Hyundai hope to grow at seven per cent.

How important is the Indian market for Hyundai's global operations?  

India is today a key market for Hyundai. Our contribution to global sales is almost 16 per cent. The contribution will keep moving up with the new Santro and the next compact SUV.