New Delhi, India – India's automotive market, the world's third largest after China and the United States, is witnessing intense competition. While Suzuki has long held a dominant 40% market share, Hyundai Motor has been aggressively investing to secure its second-place position.

Hyundai Motor India raised 2,785 crore rupees ($5 billion) in October through a dual listing on India's two stock exchanges, signaling a strong commitment to expanding its Indian operations. Chairman Chung Eui-sun reiterated the company's dedication to localizing operations and becoming a technology leader in the country.

The funds raised will be used to upgrade the Tamil Nadu plant and develop electric vehicles. Hyundai also plans to start production at a plant acquired from General Motors in Maharashtra next year, boosting its annual production capacity in India to 1 million units.

Hyundai sold approximately 610,000 vehicles in India during the 2023 fiscal year, an 8.3% increase year-on-year. The company is focusing on SUVs and electric vehicles to differentiate itself from Suzuki's dominance in the small car segment.

"Many customers are over 40 years old, and with rising incomes, they are buying higher-priced vehicles," said a Hyundai salesperson in Tiruchirappalli, Tamil Nadu.

European Collaborations and Shifting Dynamics

While Hyundai's investments have been significant, market response has been slower than expected. The company's stock price has declined since the IPO, and competition from other automakers has intensified.

Hyundai's passenger car market share slipped to 14.6% in the 2023 fiscal year, down 1.5 percentage points from five years ago. Suzuki's market share also declined by 9.5 percentage points to 41.7%.

Instead of capitalizing on Suzuki's decline, Indian conglomerates Tata Motors and Mahindra & Mahindra have been gaining market share. Tata's market share has doubled in five years, while Mahindra's has increased by 1.5 times. Their strategy of launching affordable SUVs and minivans has proven successful.

Both companies are collaborating with major European automakers to acquire advanced technologies such as electric vehicles. Mahindra signed a deal with Volkswagen Group in February to collaborate on electric batteries, while Tata agreed to co-develop automotive software with BMW Group in April.

Opportunities for Chinese Automakers

Chinese automakers have been relatively slow to enter the Indian market due to geopolitical tensions between the two countries. The Indian government has been cautious about allowing Chinese companies to enter the market. However, some experts believe the Indian government may become more lenient towards Chinese companies to create jobs, especially after the ruling Bharatiya Janata Party suffered a significant defeat in the June elections.

Sanshiro Fukao, a research fellow at Itochu Research Institute, suggested that the market landscape could change if more Chinese companies start manufacturing in India.