Despite the launch of the Exter subcompact SUV, Hyundai is confident that demand for its hatchback is going to remain strong.
The Exter has been launched at Rs 6 lakh, about Rs 30,000 more than an entry-level Grand i10 Nios, the hatchback it is based on. Keeping in mind the country’s SUV obsession and that the Exter has so much more to offer – higher ground clearance, more features, including six airbags, and more importantly, the oh-so-desirable SUV body style – it most likely will eat into sales of the Nios.
Hyundai acknowledges this but isn’t too worried. “If you’ve seen the last three to four years, customers are shifting from hatches to SUVs,” says Hyundai COO Tarun Garg. “Probably a little bit of cannibalisation can happen with the Nios, but not too much. But we are very happy because overall the numbers will definitely go up.”
If Tata Tiago sales are anything to go by, Hyundai could be right. Tata Motors consistently ships about 8,000 units of the Tiago per month, while selling roughly 11,000 units of the Punch alongside, which testifies Hyundai’s claim.
Garg states, “Customers are shifting from hatches to SUVs, still hatches constitute a very good 30-35 percent of the market. For a 4-million market, 30-35 percent is a good 1.3-1.4 million units. So, I don’t think we can really write the hatch segment off.”
On the other hand, Nios’ sales have dipped in the last three months, from an average of 8,500 units per month to about 6,500 units, indicating that the hatchback’s sales could have been dented by the Exter’s imminent arrival.
‘No more sub-entry level trims’: Tarun Garg
So is repositioning the Nios lower down the price ladder the right way ahead? In this way, the hatchback will appeal to a wider audience and could also fill the void created by the discontinuation of the Santro. But no, this strategy has been categorically ruled out. The COO says, “No more sub-entry level trims, not at all. I think we have very clearly moved beyond that in the last three years based on the customer’s choice.”
Garg further justifies, “With all models, including the Nios, it is the top trims and middle trims that see great demand. So we are very clearly seeing a trend for middle and higher segments and I think that is here to stay because very few people want to really compromise and go for the entry-level.”
This means even though Maruti sells roughly 35,000-38,000 units of the WagonR, Celerio, S Presso and Alto month after month in the entry-level segment, Hyundai isn’t keen on playing the highly competitive, low profitability game.
Also see:
Hyundai Exter waiting period stretches up to 12 weeks
‘Exter will strengthen Hyundai’s sub-Rs 10 lakh segment’: COO Tarun Garg