Stage set for Hyundai’s next growth phase

Bo Shin Seo is leaving Hyundai Motor India (HMI) on a high. The company sold a record 47,015 vehicles in October, the third straight month of 40,000-plus sales.

More than the numbers, it is the growing importance of the Indian subsidiary – the jewel in Hyundai’s crown – that Seo, Managing Director and CEO, is extremely proud of. He returns to the parent company by the end of this week after more than five years here.

For instance, India witnessed the global launch of four cars – Grand i10, Elite i20, Xcent and the more recent compact sports utility vehicle, Creta. All are doing extremely well, according to Seo. They are feature-rich, adopt the latest in Hyundai’s global design philosophy and provide enormous value for money for the customer, he adds.

“We bring more value to the customers in terms of features,” Seo said during a recent interaction. However, his dilemma is that sometimes customers do not recognise this value. For instance, he says, the seats in all Hyundai cars, right from the material, frame and springs, are superior to competition. “Hyundai seat is more than premium but how does one convey the value of the product to the customer?” he wonders.

Seo’s experience as head of production at HMI’s plant in Sriperumbudur near Chennai, prior to becoming CEO, helped him and the company in a big way. He is proud of his team and says the employees are capable of bigger things.

The workers have been trained to handle different models and variants on the same line in both plants. Robots handle a major chunk of the work in the body shop, paint shop and assembly line. This has helped the company improve quality and reduce wastage. Workers are involved in giving ideas, however small, on improvement and waste reduction. Last year alone, the company saved about ₹40 crore thanks to such initiatives.

Using robots in the paint shop has ensured that the finish is of a superior quality and the paint transfer efficiency (the volume of paint that is used and not wasted) has improved significantly, from 35 per cent to 65 per cent. Over the years, productivity has increased from about 19 vehicles per hour to 53 vehicles (per hour) in both plants.

This, say company officials, compares favourably with other Hyundai plants in the world, especially considering the number of models, variants and parts specifications that are handled, for both the domestic and export markets.

Recognising HMI’s capability in producing small cars, the parent designated it as an export hub a few years back. The Indian arm now sends out cars to over 100 countries.

Seo believes that HMI can now become the export hub for the executive segment too. Cars here include the compact sedan Xcent and the entry-level sedan Verna. Exports of both models have commenced, says Rakesh Srivastava, Senior Vice-President, Marketing and Sales. According to him, it is because of HMI’s attitude in behaving like a market leader – not necessarily in terms of sales – that it has been able to set the agenda for the industry in terms of models and features in all the cars. For instance, Santro was the first hatchback to have a power steering.

The Grand i10 was the first compact to have a rear air-conditioner vent because the company realised through “customer clinics” that a lot of owners had chauffeurs to drive it for them.

Srivastava says HMI does not let product fatigue set in for models. There are constant refreshments and changes, what the industry calls minor, major and full model changes. The way the i20 has evolved is an example. The first version was tweaked with additional features and minor design changes, followed by a complete makeover in the form of the Elite i20. The company was able to use the same hatchback for a crossover, the Active i20.

Over time, Seo sees the Indian market gradually shifting to bigger cars where customers want more premium features. He says the parent company has recognised HMI’s importance in its scheme of things, not just in terms of sales. The manufacturing and engineering expertise in India is well recognised too.

There is plenty of experience in HMI, because it is the one overseas plant of HMC that has been around the longest. “Longest means lots of experience. Last year we supported in Turkey,” says Seo. Seven manufacturing engineering employees from India went to Turkey when the plant was set to launch its new car for troubleshooting. Likewise, four from India went this year to help out in the Mexico plant. What would he like HMI’s customers to remember the company for? “I try to appeal to Indian customers by our quality, competitive price and value proposition. After all, we want to be the most loved and trusted company. That is our target,” he says. How close is the company to achieving that goal? Getting there, replies Seo. “We improve continuously. Indian customers understand that Hyundai brand is more than premium,” he adds.