Hyundai to put more money into diesel as SUV demand soars


Hyundai Motor, the second-biggest carmaker by sales in India, will continue to invest on boosting the performance of its diesel engines that power the Korean manufacturer’s premium SUVs, drawn by undiminished demand for this vehicle body-type in the world’s fourth-biggest automotive market where tighter emission norms are pushing up ownership costs.

“Diesel accounted for 26% of sales in our portfolio last year, which is similar to the ratio we registered pre-pandemic (prior to the transition to BS-VI norms),” Tarun Garg, chief operating officer (sales, marketing, service and product strategy), Hyundai Motor India, told ET. “With growing sales of SUVs, we are seeing a preference for diesel fuel at the more premium end of the market.”

Garg was promoted to his new role from January 1. Diesel variants account for 54% of sales of SUV Creta, 75% of sales of Alcazar and 72% of sales of Tucson, said Garg. The proportion is lower in entry SUV Venue – at 23%. Overall, SUVs constitute 53.3% of sales at Hyundai Motor India.

In the domestic market, the share of SUVs in overall passenger vehicle sales more than doubled to 42% in the past five years. Because of its pulling power, diesel has traditionally been the fuel of choice in this segment, especially at the higher end of the market.

Diesel variants contributed 64% to the volume in the mid-SUV segment and as much as 94% in high-end SUVs in fiscal 2021. While the ratio remains broadly similar in high-end SUVs, diesel variants now comprise about half the sales in the mid-SUV segment.

“There is an increasing demand for more premium vehicles from consumers in the Indian market. The average ticket size has gone up significantly in the last 4-5 years,” Garg said. “Today, almost 45% of our sales come from vehicles priced over ₹10 lakh, up from 21% in 2018.” In the industry, too, sales of vehicles tagged upward of ₹10 lakh rose to 41% in 2022, from 16% in 2018.

Hyundai, for one, is seeing good demand for the newly launched Tucson, which tops out at ₹34.54 lakh (ex-showroom, Delhi).
“Earlier, we were selling 1,000 units of the Tucson in a year. This doubled to 2,000 units in 2022. And now we are planning volumes of 5,000-6,000 units for the Tucson,” said Garg. Consumers in such premium segments prefer diesel not merely for its fuel economy but also for better torque and performance.

Maruti Suzuki, Renault-Nissan and Volkswagen Group stopped sales of diesel vehicles in the local market after the transition to BS-VI emission norms in April 2020. Prices of vehicles run on the fuel are expected to rise further after the transition to the second phase of BS-VI emission norms, prompting Honda to exit the market.



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