Hyundai Motor India Ltd (HMIL), India’s second-largest carmaker, is betting on a surge in rural demand over the coming months, even as the passenger vehicle industry faces modest growth prospects in this fiscal. With rural areas gaining traction as a growth driver, HMIL is doubling down on its efforts to expand its footprint in these regions.
Robust rural demand
“Rural demand has been robust and is on the rise, now comprising 21% of our total sales, up from 18.5% two years ago,” said Tarun Garg, Chief Operating Officer & Whole Time Director, during the company’s Q2FY25 earnings call. Favourable monsoon conditions and strong crop yields are driving this trend, and HMIL is aligning its network expansion and associated initiatives to capitalise on rural growth opportunities.
To improve accessibility in rural markets, Hyundai has launched over 100 mobile service vans to serve remote areas while also strengthening brand recognition through localized events such as Grameen Mahotsavs. The company’s rural coverage has already expanded from 75% to approximately 84% of India’s districts in recent years. Currently, rural dealerships account for 40% of HMIL’s network, and the company aims to continue expanding its presence in additional towns and districts, stated the COO
Garg also highlighted shifts in buyer preferences, noting a marked increase in first-time car buyers, who have consistently made up 36-38% of sales over the past two quarters—an increase from 31% in 2019-20. Many of these new buyers are opting for SUVs like the Venue and Creta, signalling a shift from traditional hatchbacks to more aspirational models. “This shift has significantly bolstered our SUV portfolio, which now represents 68.6% of our total sales from January to October, peaking at 70% in September,” he added.
Diversified auto models on anvil
Despite the Creta’s continued dominance, accounting for 33% of domestic sales, Hyundai is actively pursuing a diversified model lineup. Recent product introductions include a refreshed version of the Alcazar, which, along with Venue and Exter models, now consistently achieves monthly sales volumes of 10,000 and 7,000-8,000 units, respectively. Garg hinted at additional diversification efforts within the mid-SUV segment, aimed at reducing Creta’s share of sales and fostering growth across multiple models.
New plant in Pune in Q3FY26
Hyundai is also progressing with the construction of its new Pune plant, which is set to become operational in Q3FY26. This facility will play a crucial role in meeting increasing domestic and export demands, especially within the high-growth SUV segment. “The Pune plant will enable us to adjust production capacity to align with evolving market trends and demand cycles,” Garg said, noting that the company plans to roll out further model announcements as market conditions develop.
Unsoo Kim, Managing Director of HMIL said the Group’s global export strategy remains robust, with HMIL being positioned as the production hub for emerging markets. This positioning enables HMIL to balance domestic and export production while capturing growth and enhancing profitability through natural hedging.
The company’s latest entry-level SUV, the Exter, Hyundai’s eighth model for India, has begun exports to South Africa with a monthly target of 1,000 units. Models like Verna and Alcazar have also gained popularity in regions like the Middle East, with Hyundai now exploring additional left-hand drive markets.