Is the Kia+Hyundai story of challenging Maruti Suzuki, living up to its expectations?
Hyundai was considered the only challenger to Maruti, but neither the volume nor sales network was sufficient to challenge the might of Maruti Suzuki. Then when Kia came into the Indian market, Hyundai found a partner along which it could challenge the dominance of Maruti Suzuki.
As we all know, Kia and Hyundai are siblings of the same family. We do remember back in 1997 when Kia had filed for bankruptcy, it was Hyundai that had purchased a huge share of Kia and had got the company back afloat. To date, Hyundai Motor Company owns a part of Kia Motor Corporation and remains Kia’s largest stakeholder. In return, Kia Motors also has a share in different Hyundai Motor subsidiaries.
The difference between Kia and Hyundai is that both companies have their own brand philosophies to uniquely produce their vehicles. As you can see, they are related but not the same! As sister companies, both Hyundai and Kia work together, but under separate brand entities, to pull in impressive brand revenues that continue to grow every year.
In India, Hyundai of course was the first mover compared to Kia. However, Kia made up for a late entry with a stellar debut and consistent products which did well in the Indian market.
Maruti Suzuki on the other hand is an old horse of the Indian Industry. The regular channel of Sales was through the mother brand Maruti Suzuki, however, recently we have seen the launch of the Nexa Channel and the rebranding of the existing channel at Arena Channel. Together, their volumes are counted under the mother brand Maruti Suzuki.
LY Hyundai+ Kia registered a volume of 2,31,830 units ( January to July). However, this year they registered a volume of 4,30,796 units. This was a stellar growth of almost double the volumes TY. ( January to July)
However, if we drill down the performance this year on a month-on-month basis, we will be surprised that despite new launches and monopolistic UV segments, both Kia and Hyundai have managed to only hold on to the market share as against LY. in fact there is a drop of 0.7% cumulatively. The gain in market share from Kia was about 0.3% however, 0.37% of the market share was lost by Hyundai, which lead to the cumulative loss in market share.
On the same front, despite Volume growth, Maruti Suzuki lost 3.40% of its market share. This happened despite growing by 67.16% in volume for January to July'21.
So, Maruti has lost market share and so has the combination of Kia+Hyundai. And both of the above mentioned have grown in volumes lesser than the industry growth rate of 86.36%, so for now, we observe the combination of Kia+Hyundai has started to stablise around 23.02% market share. We haven't seen any major gains for the year currently from this combination.
Now, do we conclude that this is the status quo that will remain for the rest of the months to come or the rest of the year?
The answer to this question depends on the fact that which of these OEM's is able to solve the supply issue at the earliest, since all 3 OEMs ( Maruti, Kia & Hyundai ) have customers who have booked in good numbers, but all 3 have long waiting periods currently, whichever of these OEMs solves the issue at the earliest, will be able to cater to the current potential customers.
And the other important factor being, the new launches from all 3 OME's in the SUV, MPV, and Compact SUV segment will play a crucial role in how strongly Maruti will build its leadership and also, to what extend Kia+Hyundai will challenge MSIL.
While we debate on, How strong is the Kia+Hyundai combination or how much better is Maruti Arena+Nexa, we seemed to have forgotten one important fact, that the actual winner this year is neither, Maruti or KIA+Hyundai, it is actually Tata Motors, who has grabbed a whopping 3.4% market share growth and registered a market share of 9.53%, which brings us to another thought, should the other OEMs actually be more concerned about Tata Motors for now.