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Hyundai Pays Back

Hyundai Motor India Ltd is already giving the Korean chaebol returns. How come?

By Swati Prasad

HMIL: Scoring early

As the news puts it, Hyundai Motor India Ltd (HMI) has become the first car MNC operating in India to start paying its parent company back, by way of repatriated dividend returns. The Korean chaebol has recently received a dividend of $25 million (Rs 120 crore) from its Indian subsidiary.

The figure in itself is not remarkable. HMI, which now has some 300,000 cars running on Indian roads, made an estimated net profit of Rs 210 crore in 2001-02 on a turnover of Rs 3,403.3 crore. It is now the most profitable car marketer in India.

What is remarkable, though, is the quick success that the Koreans seem to be enjoying in India (LG and Samsung are the other companies that come to mind). This, after all, is supposed to be the ultimate long-haul market, right? The market in which investment needs to be ploughed and ploughed before any sign of returns, right? So what's with these guys?

One explanation is that the Koreans, being new to the global game, are keener than the Japanese, Europeans and Americans to make a go of emerging markets - and are therefore that much more likely to give it their best shot. Hyundai has been fast into India, and has been anything but cautious in putting down the money. It has invested $700 million in its domestic plant at Irrungattukottai (near Chennai), so far, and intends pumping in another $300 million or so.

The other explanation, and perhaps a bigger success factor, is that the Koreans are not using old marekting templates from other markets deemed to be higher up the evolution curve (and thus deemed to have 'been there before'). Instead of seeing India as just another outpost for their global operations, the Koreans have started here with a blank slate, and have used genuine local insight to get their act together.

The best example is the Santro, which, in many ways, was just the right upgrade car for the Indian Maruti 800-owner. Larger, more powerful, sturdier and a driving vantage that's considerably higher on Indian roads - a big plus in traffic where height is right. For just some Rs 1 lakh more, Santro is not a car as much as a compact sport-utility vehicle (SUV).

The tightly focused manner in which the Santro seared its way into the target's mindspace, all the bolt-sniffing theatrics with Mr K-k-k-kim et al (in the advertising), of course, is the stuff of marketing legend now. A story not just of getting the product right, but understanding how to communicate with the Indian buyer, either sophisticated or starstruck. The brand has sold 250,000 units, and counting. Now, the car is daring to have a female make her debut as its brand ambassador - the power-personifying, virginity-shrugging Preity Zinta.

If empowerment of local market wisdom has been the key to Korean success (LG being the other symmetrical example, with Rani Mukherjee rumoured to be its next face), it isn't much of a secret anymore. Rivals have indeed caught on, and MNCs of all stripes are ceding more and more control to their local lieutenants.

In other words, the marketing dormancy that had characterized so many Western MNCs (never mind the Japanese for now) may soon be a thing of the past. A pointer is the success of Fiat Palio, which juxtaposed Sachin Tendulkar, a shopping expedition, a flaming car and a consonant soundtrack in its debut ad campaign, to thrust its way into the heat of the B-segment action.

Car marketing sure is getting interesting. Expect the Hyundai Getz, designed to take on the Palio, by June next year. This car is likely to be launched in three engine capacities of 1.1 litre, 1.3 litre and 1.5 litre.

HMI also plans to launch the Terracan shortly -- a 2.5 litre SUV priced at an expected Rs 18 lakh. Other launch plans include Grandeur XG, a mid-luxury car (either Elantra or the Matrix) and even a one-tonne truck, to fulfill niche demand for ambulances. Will Hyundai show the same chutzpah that it did with its first launch?

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