Hyundai Motor India Steps on the Gas Ahead of IPO, Faces Rising Competition

South Korean automaker Hyundai Motor is looking to solidify its position in India’s booming car market, filing for a record-breaking initial public offering (IPO) of Rs 25,000 crore (approximately USD 3.5 billion). This comes amidst impressive sales figures for the first half of 2024, marking their highest ever at 272,207 units, a 2% increase year-on-year.

However, Hyundai faces growing competition from domestic players Tata Motors and Mahindra & Mahindra, who are steadily capturing market share. While Hyundai remains the second-largest car manufacturer in India, its market share has dipped slightly in recent years, going from 17% in 2021 to 13.8% in the first half of 2024.

Hyundai’s India Growth Story

Despite the slight decline in market share, Hyundai’s Indian operations are a significant contributor to the company’s global sales. In 2023, Hyundai produced a total of 765,000 vehicles in India, making it a key production base. The upcoming IPO is seen as a strategic move to strengthen Hyundai’s foothold in the fast-growing Indian market and potentially gain additional capital for further investment.

Competition Heats Up

Tata Motors and Mahindra & Mahindra are posing a significant challenge to Hyundai’s dominance in the number two spot. Both companies have been ramping up production and capturing market share, with Tata selling 13.2% and Mahindra selling 12.4% of all passenger cars in June 2024.

Tata Motors is expanding its electric vehicle (EV) portfolio, aiming to launch 10 new models by 2026. Mahindra is also making a big push into the EV space, planning to invest Rs 270 billion over the next three years to develop SUV and EV production capacity. Maruti Suzuki, the current market leader, has yet to enter the EV market.

Hyundai’s Electric Vehicle Plans

Hyundai acknowledges the growing importance of EVs and is investing heavily in this segment. The company is spending Rs 200 billion to develop electric vehicles in India and Rs 70 billion to set up a second manufacturing plant dedicated to EVs, which is expected to be operational by late 2025. The launch of an electric version of their best-selling Creta SUV is planned for early 2025.

Looking Ahead

The Indian car market is expected to continue its strong growth trajectory, making it a lucrative battleground for automakers. Upcoming Hyundai IPO and significant investments in electric vehicles signal their commitment to remaining a major player in this market. However, the company faces stiff competition from domestic manufacturers who are also aggressively expanding their presence in the EV segment. The race to win over Indian car buyers promises to be an exciting one in the coming years.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.