How Kia Motors started ruling the Indian Automobile Industry?

Kia motors

by 5paisa Research Team Last Updated: 2022-07-29T22:23:25+05:30

How many Automobile companies in India do you know who became the seventh largest automobile company just 8 days after launching its first car? 

Became the seventh largest company in the third month, and by the seventh month it became the fifth largest car maker in India.

Well, the feat is tough to achieve not in India but anywhere in the world. But Kia Motors did that. 

India is a graveyard for foreign automakers! At a time when foreign companies like Ford and GM were leaving the country, Kia motors took the Indian automobile industry by storm. 

Kia Motors entered India in August 2019 when the automobile industry in India was witnessing its worst slowdown ever. Their first car Seltos was an immediate hit among the Indians, in just seven months  Kia had surpassed the best selling Creta in the segment and sold 81,784 units of this SUV, which made up 57% of the total midsize SUV sales of 143,435 units. 

What is the secret sauce behind its success? 

A lot of people will tell you they have eddy designs, nice sunroofs, and blah blah blah! 

But that isn’t really a reason for its success. A lot of companies have come in India, with better cars and they have not survived. Indians want a premium car but a price that is not heavy on their pocket, due to which automobile companies have struggled to be profitable in India.

When Ford wrapped up its operations in India, its president stated "We have not been able to find a sustainable path forward to long-term profitability that includes in-country vehicle manufacturing," 

While Ford struggled to be profitable in India, Kia within just three years of operation is profitable, Kia India registered profit after tax of Rs 1,111 crore for the year ended March 2021. 

Despite the pandemic and lockdown, Kia grew its revenues by over 80% and operating profits by an eye-popping 400% in FY21.

It isn’t just the features or premium quality, it is a lot more than that!

Hyundai

The number of foreign automobile companies that have made big in India is a handful, and one of the most successful companies is Hyundai. Hyundai motor group is Kia’s parent company, and due to that, it has access to Hyundai’s expertise in Indian markets.

Hyundai's expertise and knowledge of Indian markets is Kia’s competitive moat or advantage in India. Hyundai after so many years has data of lakhs of indian customers and it exactly knows what an Indian wants in its car, and it is probably helping its little brother in making it big here.

Being a part of HMG group doesn’t just help it with the knowledge and data but also gave it access to the huge dealer network across India.

Having a dealer network is crucial for an automobile company to be successful in India and in the initial years it's next to impossible for a company to have a network that Kia has. The company has 339 touch points across 160 cities in India.

Just when it started it had access to 150+ dealers, which gave it access to 75% of the Indian markets, so being a part of the HMG group gave it a huge advantage.

Now, the synergy with a giant like HMG comes with other advantages as well, both companies have a single R&D unit, which means they put in less money on developing new technologies. 

Timing: 

Now you can put this as well on Hyundai’s knowledge, the timing of arrival was perfect. 

Hyundai entered in 1998 with its Santro when the mass-market segment was growing, while Kia entered with Seltos when the Indians were looking for compact SUVs. 

Compact SUVs were a fad between 2015-2020 in India, Hyundai’s Creta was selling like hot cakes between 2018-21, but it was on a bit higher side. 

Kia entered the most booming category of mid-sized SUV and provided the best features, and connectivity that appealed to the youth priced it right for the price-sensitive Indian audience, and boom!

Kia Motors definitely is growing by leaps and bounds in India, reportedly the company has also launched its electric car abroad called Kia EV6 which has features like a dual-screen layout – one for the digital dials and another for the infotainment system. It also offers connected car tech, a new two-spoke steering wheel design, an augmented reality display, and a number of advanced safety features.

Let’s see if the company can take on Tata, which is the undisputed king in this segment.


 

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