1. What is reason for Hyundais shift in focus towards India & Chinas car market?

The Rise of Asia

According to estimates of Brooking Institution, a US public policy research organisation, the US' and
Europe's share of the world's middle class today at around 50% will dip to 22% by 2030. In Asia, it
will more than double from 30% to 64% by then. This shift is already reflected in the automobile
industry.
About a decade back, in 2002, Asia's contribution to global production capacity in the automobile
industry was 15-20%. Today it accounts for over half. China has become the top country in car sales,
beating the US. Auto MNCs, lured by this huge growth potential, are shifting production bases to Asia to
be closer to their customers. India with a capacity to produce 3 million cars is the third largest.
With vehicle penetration in India at a low 13 per 1,000 people (compared to 45 per 1,000 for China) and
a growing young population, it should soon overtake Korea as the second-largest car producer in Asia,
after China.
From High Cost to Low Cost
It helps that production costs in most developed countries like the US, Japan and most western
European countries are sharply higher than the emerging markets.
As a result, auto MNCs are shifting their production bases from high-cost economies like the US and
western Europe to low-cost countries like China and India. Analysts estimate that producing cars in India
today may be 15-20% cheaper than in the US
Convergence of Demand & Norms
At a macro level, there is some convergence of the kind of vehicles that consumers in different markets
need. Also, globally, there is a clear shift in consumers' preference for smaller, compact and fuel-
efficient vehicles. All this means that auto MNCs have to deal with a far less heterogeneous policy
environment and consumer demand allowing them more room to pick their production location.


2. What are the strategies Hyundai is planning to put into action to increase its share in
India?

The budget cars i10 and i20 are produced only in the Hyundai plants of Chennai and they are exported
globally. It has an R&D center in Hyderabad to improve their manufacturing methodologies and to
modernize the styles of cars according to customer needs.

Hyundai Motor India Limited} (HMIL), the second biggest auto company of India, has introduced
six forms of cars in its A2 (Small cars), A3 (Mid size cars) and A5 (Luxurious cars) segments and
the fast-moving autos are Santro Xing, i10 and i20. With its two car production plants in
Chennai, it can produce more than five lakh cars, in a year. The budget cars i10 and i20 are
produced only in the Hyundai plants of Chennai and they are exported globally.
It has an R&D center in Hyderabad to improve their manufacturing methodologies and to
modernize the styles of cars according to customer needs.
Hyundai Motors India Limited recently announced that the company will be launching it six new
models over the time span of three years. Besides, the launch and the temporary closure of
bookings, this company will also indulge itself in few of the promotional activities.
Hyundai Motor is keen to expand its market now to rural areas with setting up 300 new rural
sale outlets all this expansion is in progress for the launch of the cheapest car from the Hyundai
stable until November this year.