In the global excavator markets today, Hyundai is positioned at Number 5. There are about 11 developing countries and emerging markets where Hyundai holds the largest market share, like Russia, Brazil and some African nations, where Hyundai controls a market share of 44 per cent, says Dheeraj Panda, Head - Marketing & KAM, Hyundai Construction Equipment India. Excerpts from the interview.
Hyundai as a brand in the construction equipment sector, does not have too strong a presence, as in the automotive sector. What do you have to say about this?
We are reaching there. In India, Hyundai started operation in 2008; and we are proud to say that in the short period of four years, we have taken market share from zero level to about 17 per cent by today. We are targeting a market share of 20 per cent in 2013. And we are obviously at Number 2 position in the industry. It is actually a testimony to the fact that our machines are well accepted by the end-user segments and the financers as well.
Geographically, has the visibility factor impacted your sales?
In fact, we are not really worried about that. May be that was the case in 2009-10. We have created the visibility over the years. We have a pan-Indian market share about 17.5 per cent which we will be increasing to 20 per cent by 2013. In the east we have markets as high as 35 per cent. Also in the south and some pockets in Maharashtra, we are getting very good markets.
What was Hyundai's performance like in 2012?
Overall, there has been 4.5 per cent negative growth vis-a-vis 2011-2012. With the fluctuation in dollar, rise in input cost, and the way the whole economy has been, it was a tough year for us, too; nevertheless at Hyundai we have grown 23 per cent. We ended up with a market share of close to 13.5 per cent in 2011 and this year we would be about 17.5 per cent. Last year we had sold 2034 excavators and this year we hope to close around 2,500 excavators. There has been a positive performance from our side. Though mining activities have slowed down, and growth has been nonexistent in some sectors, the retail segment which is our primary focus was generally steady.
That's quite commendable. To what you attribute this success?
There are some factors that made it possible. Firstly, it is team work, the aggressiveness with which the entire Hyundai team has operated including a very strong leadership under Kong, our Managing Director. Another factor is that the high level of acceptability of Hyundai machines in the market.
Hyundai machines over the last five years have been accepted quite well; the reliability, the productivity; low maintenance and operating cost; all have gelled well with customers. So, acceptability has gone up which is a contributing factor to the growth story. The third factor is the recognition what we have got from the financers in the industry; the delinquency rates have been minimal and these are prime factors which has actually helped us in tough times.
We have tried to position our machines as a futuristic machine. We offer five models in the 20T excavator segment which is the largest segment (about 45-50 per cent of the entire market). We have 210, 215, 220-7 and we have launched 220-9 series, upgraded from 7 to 9 which is again technologically advanced machine with a better reliability and greater productivity and the best in the industry with other electronic features which have aided the smoothness of operation and the monitor the panel wherein the diagnostic model which operator can fix as per his application and work which he is required to perform. So the entire range is covered. Be it the lower segment and a niche segment, people who are willing to pay extra for that so the entire set is covered.
What about on the mining front?
Our focus has been on retail. For mining and quarrying applications, we have a 34- tonner, primarily designed for Indian applications, to match with the best in the industry. As mentioned, mining generally has been slow, so focus has been on retail and there we have scored quite heavy.
What is your product strength in the small capacity segment?
In the small capacity, from 8 to 14 tonne, we have gained substantial market share. The 14-tonner has been the largest growing segment, which ideally suited for quarrying and multiple applications in construction.
Any plan to increase the service network?
Definitely. Currently we have about 27 dealers and close to hundred touch points what we call 3 S points - the sales, service and spare parts. We are trying to be as close to the customer; that is every 300-350 km, we have a touch point so the customer does not have to wait for more than 12 hours for service engineers to reach him. We should reach our customer between 0-12 hour. So that has been the primary focus. We are definitely going to increases the touch points further.
Do you have any capacity augmentation on the cards?
Not immediately. Seeing the market and the way it has been going, we have already invested close to Rs 400 crore with respect to plant and machinery that we have in Pune. It is a 50-acre plant set-up in Chakkan with two fabrication lines, one paint shop, and one assembly line, apart from warehouses, and training centre and head office. We do not intent to increase capacity in the near future because the existing plant that manufacture 3,000 units a year has a scalable capacity of 10,000. So capacity augmentation is not in the immediate future but if required, we will do it.
What are the initiatives you have taken for training the operators?
Training is one of our focus areas. We have a full-fledged training school in Pune where we conduct round- the-year training for customers and our dealers and engineers. We also have simulator-based training that gives you a real feel of excavators. We have 27 dealers with service strength of 250 people who are trained on a regular basis. So we try and identify their skill levels and provide specific training in hydraulics or electrical. Moreover, we have a master operator who goes around and into each dealer point and train operators in the training programme conducted by the dealers.
The user segments are getting pickier when it comes to investing in a new machine
True. The game is getting tougher. With timelines shrinking, the input and operating cost vis-a-vis the fuel cost going up, the budgets and packages are going to be tight. The customer would expect machines to be highly reliable, at the same time, with minimum capital investment from their side with a very low operating cost; and those are the kinds of demands that are going to come in. So we are trying to further improve the reliability factor, not only of the machine but of the components, without affecting user prices and the capital investment they are trying to get.
How long will you be able to sustain the price levels?
Our strategy is to look inwards. While we may not be able to get the right kind of price, but there is a cost for value money proposition for the machine, so focus here has been looking inward; controlling our cost and designing the machine smartly. We carry out future benefit analysis. What kind of features is actually meaningful to the customers and which way they are actually benefitting them with respect to the delivery and output part. So, there is an optimisation level and give- and take with smart design and application specific design and India- specific inputs that we build into the machines.
To what extent does indigenisation help to check prices? We have had an overall indigenisation level of 40-50 per cent across the models as of now. We intend to take it further by about 10-15 per cent by 2015. That also gives us more flexibility in terms of pricing.
How do you see growth prospects three years down the line?
The India growth story is not going to stop. There might be temporary slowdowns because of land acquisition issues or mining issues or environmental issues but growth has to happen. The growth story will continue at a different pace depending on certain external factors, whether it is political, environmental, etc.
Why should a customer buy from Hyundai?
It is a value-for-money proposition. The flexibility we can offer as a package, the full maintenance contract or the support package is unparalleled today. In fact, it is no more a question of why, rather it is why not. We have machines to cater to each segment now. As I said, we have a 9 series which feature-wise, matches with the best in the industry. Our USP has been fuel consumption. We have one of the best productivity, fuel consumption figures in the industry today across all segments.