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By 2010, Hyundai motor wants to be
one of the top five carmakers in the world. And no car manufacturer
can aspire to be that without first proving its mettle in the American
market. On that count, Hyundai is more than just winning.
As recently as 1997, Hyundai had just half a per cent share of
the American cars and light trucks market. In 2001, that jumped
to 2 per cent. Not impressed? Consider that last year alone, Hyundai
upped its sales in the US by a staggering 42 per cent. Clearly,
the automotive underdog is getting a leg up. Emboldened by its performance,
global CEO Chung Mong Koo has now okayed the building of a $1-billion
plant in Montgomery, Alabama-Hyundai's first manufacturing facility
in the US that will roll out 3 lakh cars a year.
Why is Hyundai winning in the US, which quite simply is the most
competitive car market in the world? For one, the company has made
quantum gains in terms of quality. Its famous 10-year-warranty offer
in the US is not just a brilliant marketing gimmick, but a testament
to its confidence in its cars. In fact, its quality benchmark is
none other than Toyota.
That apart, Hyundai is proving to be a wily price warrior. Its
SUV, Santa Fe, which debuted in the US in 2000, sells for an average
of $21,000-almost half of most other comparable sports-utility vehicle.
Of course, Hyundai also packs more value into its cars for same
or lower price. For instance, its Sonata (with a V6 engine) costs
only $20,000 or so in the US, whereas for that kind of money you'd
only get a four-cylinder Honda Accord or Toyota Camry. A full-fledged
manufacturing unit will only add to Hyundai's marketing power in
the US, where all its cars sold are imported from Korea. Still,
keeping his 2010 promise seems like a tall order for CEO Chung Mong
Koo.
GOING PUBLIC: WILL INVESTORS
BITE?
Hyundai's IPO is being keenly watched
for a number of reasons. For one, it will be only the second automotive
MNC to list in India. The first was Daewoo Motors, which today is
buried under a heap of losses. From the investor's point of view,
Hyundai will diversify the portfolio of profit-making automotive
stocks. At the moment the choice is limited to two-wheeler companies.
The big question, however, is of valuation. There are no ready
benchmarks available. Besides, most valuations are done via the
discounted cash flow method, which takes into account future earnings
of the company. Hyundai's earnings projections, however, will be
made available-if at all-only with the offer document.
But one could look at the industry's favourite stock, Hero Honda,
for some indication of PE multiple potential. Hero Honda's multiple
is around 15. But that may not come Hyundai's way, simply because
the overall car market is growing much much slower than the motorcycle's.
So, let's assume a lower multiple of 10 for Hyundai. By that measure,
its valuation would be Rs 2,100 crore. A 10 per cent float will,
then, fetch Rs 210 crore. Hyundai should push the IPO through while
auto stocks are still in favour on Dalal Street.
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GETZ
ENGINE: 1.3 litre and 1.5 litre
LAUNCH: Expected sometime in June 2003*
Price at Rs 4.8-6 lakh, Getz will compete with the Palio |
TERRACAN
ENGINE: 2.5 litre
LAUNCH: August-September 2002
A luxury SUV, the 4WD is Hyundai's answer to Pajero. Price:
Rs 18-20 lakh |
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MATRIX**
ENGINE: 1.8 litre
LAUNCH: Sometime in 2003*
Price at Rs 9-10 lakh, Matrix will compete with Mitsubishi
Lancer and Opel Astra |
GRANDEUR
ENGINE: 3 litre, V6 engine
LAUNCH: Sometime in 2003*
Price at Rs 25-28 lakh, Grandeur will compete with Mercedes-Benz
E-class cars |
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ELANTRA**
ENGINE: 1.8 litre
LAUNCH: Sometime in 2003*
Price at Rs 9-10 lakh, Elantra will also compete with Mitsubishi
Lancer and Opel Astra |
H100
ENGINE: 1 tonne, LCV
LAUNCH: Sometime in 2003*
It is to be positioned as a state-of-the- art ambulance van.
It will be priced at Rs 7-10 lakh |
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