Our newly-launched Exter has set the cat among the pigeons, says Hyundai Motor India COO

HMIL on 10th July rolled out the Exter at introductory prices ranging from Rs 5.99 lakh to Rs 9.31 lakh (ex-showroom).

Hyundai Motor India Limited (HMIL) has logged 11,000 bookings of the Exter since sales opened on May 8, and  is aiming to sell 10,000 units per month in the medium term. It expects the micro-SUV market to reach 2,40,000 units per annum.

Tarun Garg, Chief Operating Officer, HMIL said the newly-launched model will expand the market. He added that the car aims to gobble up a sizeable chunk of the market for hatchbacks priced roughly the same as the Exter.

“With the Exter, we will be able to entice many first-time buyers away from hatchbacks to small SUVs,” Garg said, adding, “In the small SUV segment, a customer is looking for fuel efficiency, a lower price point, etc.  By offering 40 safety features, including six airbags as standard across all variants, we have set a benchmark.  This will set the cat among the pigeons.”

On July 10, HMIL rolled out the Exter at introductory prices ranging from Rs 5.99 lakh to Rs 9.31 lakh (ex-showroom).  While this model is pitted against the Tata Punch (Rs 5,99,900-8,91,900), the company aims to grab a slice of the market from similarly-priced premium hatchbacks by competitors such as Maruti Swift (Rs. 5.99-9.03 lakh), Maruti Baleno (Rs. 6.61-9.88 lakh), Tata Altroz (Rs. 6.60-10.74 lakh), Tata Tiago (Rs. 5.60-8.11 lakh), etc.

“While people are gravitating towards SUVs, it is difficult for a customer with a budget of Rs 6-7 lakh to upgrade to a Rs 12 lakh SUV.  But with an entry-level SUV like Exter coming in, such customers will have an option, further expediting the migration from hatches to SUVs,” added Garg.

Puneet Gupta, Director, S&P Global Mobility, an automobile analytics firm, believes that changing consumer preferences, shift towards EVs, and the entry of young buyers in the Indian market will help this segment. In his view, “The pricing of Hyundai Exter is very aggressive, and along with Tata Punch, this segment can explode. This will of course cannibalise the hatchback market. I think customers derive more value and satisfaction from a small SUV.”

While Garg acknowledged that once Exter hits the market there will be some cannibalisation of stablemates like the Grand i10 Nios hatchback, i20 superhatch, or the Aura sub-compact sedan, he is unfazed as long as the overall volumes are growing.

Hyundai clarified that the Exter, which is offered only in petrol and CNG powertrains, will not have diesel, turbo-petrol, or electric variants.

“We have different strokes for different folks. Our strategy is clear here: the   customer is looking for fuel efficiency and value, and our petrol and CNG, manual and automatic variants are providing that. For bigger SUVs (Venue and Creta), customers are also looking for diesel options for driving long distances.”

He  added that the company will not reduce its focus on hatchbacks, which still constitute 35% of the overall passenger vehicle (PV) market of 40 lakh units per annum.

“The size of the hatchback market is more than 10 lakh units (per annum), so you cannot ignore it,” said Garg.

Asked about the Exter’s target group, Garg said that around 40-45 percent of the customers would be  in the 18-30 age bracket. He added that  he anticipates a lot of business from Kerala, where there is a very high demand for small size SUVs.

JATO Dynamics, an auto market intelligence firm, says that the entry-level SUV segment (Rs. 6-9 lakh) which accounts for 13% of the overall SUV market, has declined this year.  As per its assessment, Tata Motors’ Punch is the clear segment leader with 54% share (average monthly sales of around 10,500 units). Maruti Suzuki’s Ignis and Nissan India’s Magnite are a distant 2nd and 3rd.

“Hyundai has been fighting to grow the market share of its sub-compact SUVs, and Exter could help it reclaim some lost ground. The company will need to ensure that the Exter does not cannibalise the sales of its SUVs ,’’ said Ravi Bhatia, MD, JATO Dynamics. “Hyundai needs a product strategy that includes cars in the higher segments as well, which is where the market is growing,” he added.

On the back of the Exter and other SUVs, HMIL is confident of growing its overall sales to about 6,00,000 units in CY2023.  It hopes that by then the contribution of SUVs, which is 54 percent currently, will go up to 60 percent of its total sales.

“In the first half of this year, while our overall sales have grown 10.5 percent, SUVs have grown 15%. In SUVs, Creta has grown 22 percent, and Venue has grown 9 percent. With Exter coming in, we foresee increased contribution from SUVs,’’ explained Garg. He added that he also expects growth from models like the Verna sedan, which grew twofold during H1 CY2023.