Hyundai Motor Company, a name synonymous with innovation and reliability, is making significant strides with its upcoming public offering. This article delves into the details of Hyundai's Draft Red Herring Prospectus (DRHP), shedding light on its robust business model, technological advancements, strong branding, and unwavering commitment to India.
Hyundai Motor Company, the promoter, is offering up to 142,194,700 equity shares, each with a face value of ₹10. This offer represents 17.50% of the post-offer paid-up equity share capital, marking a significant milestone in Hyundai's journey. The company's decision to go public underscores its confidence in its solid foundation and growth prospects.
Hyundai's business model is anchored on four fundamental pillars: strong parentage, advanced technology, a powerful brand, and localisation.
Firstly, Hyundai's strong parentage plays a crucial role in its operations. Hyundai Motor Group, the third-largest auto original equipment manufacturer (OEM) globally based on 2023 passenger vehicle sales, provides extensive support to Hyundai India in various operations, including research and development (R&D), design, and manufacturing. This support is underscored by a substantial investment of ₹1,756.47 billion (US$24.62 billion) in global R&D from 2014 to 2023, highlighting the group's commitment to innovation and excellence.
Secondly, Hyundai leverages cutting-edge technology across product design, manufacturing, and customer engagement. The Chennai Manufacturing Plant, Hyundai's first global integrated plant outside Korea, exemplifies this technological prowess. With a production capacity of 824,000 units as of March 31, 2024, the plant incorporates Hyundai Autoever's "smart factory" platform, ensuring flexible and automated manufacturing processes. This technological edge enables Hyundai to maintain high standards of quality and efficiency.
Thirdly, the Hyundai brand has become a trusted name in India, evident from its impressive haul of over 50 awards in Fiscal 2024 alone. The brand's emphasis on customer experience, design leadership, and exceptional value has earned it a spot as the 32nd most valuable brand globally, with a brand value of ₹1,695.57 billion (US$20.41 billion) in 2023. Innovative marketing initiatives and strategic celebrity endorsements further bolster Hyundai's inclusive brand image in India, reinforcing its position as a market leader.
Lastly, localisation is a key strategy for Hyundai, enabling it to offer feature-rich, reliable vehicles at competitive prices. Approximately 90% of parts and materials are sourced from suppliers in India, particularly from the four districts around the Chennai Manufacturing Plant. This localisation enhances profitability and operational efficiency, adhering to the "Just in Time" manufacturing concept. By fostering strong relationships with local suppliers, Hyundai ensures a steady supply chain and supports the local economy.
Hyundai's investment in India is substantial, demonstrating its long-term commitment to the market. The company has invested ₹297.41 billion (US$5.04 billion) in tangible fixed assets and capital work in progress as of December 31, 2023. This investment has created a robust manufacturing and supply chain ecosystem, generating numerous job opportunities across the OEM value chain. The Chennai Manufacturing Plant, with an annual production capacity of 824,000 units, serves as a production and export hub for emerging markets. The recent acquisition of the Talegaon Manufacturing Plant in Maharashtra is set to boost this capacity significantly. Once fully operational, Hyundai’s aggregate annual production capacity will reach 1,074,000 units, solidifying its position as a major player in the Indian automotive market.
In alignment with India's push towards electric vehicles (EVs), Hyundai is taking proactive steps to develop an EV supply chain and manufacturing capabilities in the country. This includes localisation of EV parts, development of an EV platform in India, and research and development on cost-effective green hydrogen energy in collaboration with the Government of Tamil Nadu and IIT Madras. Hyundai's partnership with the governments of Tamil Nadu and Maharashtra also includes significant incentives and subsidies, subject to certain investment commitments. These initiatives underscore Hyundai's commitment to sustainable mobility and its vision for a greener future.
Hyundai is the second-largest auto OEM in India and the largest exporter of passenger vehicles. Consistently, Hyundai has been a leader in the mid-size SUV sub-segment since 2019, with the Creta securing a 30% market share. Additionally, the Verna has led the premium sedans sub-segment with a 31.2% market share during the same period. Hyundai's dominance in these segments highlights its ability to meet diverse customer needs and preferences.
Hyundai's status as India’s largest exporter of passenger vehicles from 2005 to 2024 is another testament to its strong market position. The company has exported 3.53 million passenger vehicles to over 150 countries, serving as a production and export hub for emerging markets. Exporting helps Hyundai earn higher average selling prices and provides a natural hedge against foreign currency risk, further strengthening its financial position.
Hyundai's diverse portfolio caters to a wide range of customers, offering 13 passenger vehicle models across sedans, hatchbacks, and SUVs. This includes petrol, diesel, CNG, and EV options with various transmission choices. The company’s diverse portfolio accounted for approximately 89% of the total passenger vehicle sales volume in India in Fiscal 2023, underscoring its broad appeal and market penetration.
Hyundai boasts a robust sales and service network with 1,366 sales outlets and 1,550 service centres across India as of December 31, 2023. This extensive network ensures comprehensive customer touchpoints, facilitating everything from vehicle purchase to after-sales services. Hyundai has also digitised customer and dealer interactions through platforms like the “myHyundai” app and the “Click to Buy” website. These platforms provide a seamless 360-degree customer experience, covering everything from vehicle browsing and purchase to maintenance and support.
The Chennai Manufacturing Plant is one of India's largest single-location passenger vehicle manufacturing plants, operating with a high degree of automation. The plant can produce eight different models on one line and six on another, ensuring operational efficiency and agility in delivering new models. This flexibility allows Hyundai to quickly respond to market demands and introduce new models, maintaining its competitive edge.
Hyundai's detailed DRHP showcases a well-rounded business model, technological advancements, Source Link a strong brand presence, and a deep commitment to India's automotive future. As the company gears up for its public offering, these elements underscore Hyundai's vision and potential for sustained growth and innovation in the Indian market. Hyundai’s journey in India is a testament to its strategic foresight, operational excellence, and unwavering commitment to delivering value to its customers. As it continues to innovate and expand, Hyundai is well-positioned to drive the future of mobility in India.