Korean firm Hyundai motor industry localization strategy in India

1. Hyundai
Korean Firm strategy
in Indian Market

3. (HMI) Hyundai Motor India
 Historical overview
1996 : HMC move into India.
May,1996: Received approval.
Status: 100% ownership
Product line: Santro, Verna, Avante, and Sonata,
i10, and i20
October 1996 :1st plant
2007: 2nd plant

4. Investment:
Investment:
 The initial investment was $700 million.
 Though 100% ownership, the maximum allowed ownership
interest ratio for foreign firms was 51%.
 However, HMC achieved more than 70% of the localization
target within 4 years of its operation. Thus the Indian
government gave permission to HMI for 100% of ownership
interests.

5. First plant
 First plant, October 1996,Chennai,Tamil Nadu.
Tamil Nadu State government provided its wholehearted
support in-
purchasing plant location,
investment permit,
securing infrastructure supports
Thus, HMI complete the plant within 17 months
instead of the initial prediction of 3 years.

6. Automobile market in India

7. Competitor
 HMI decided to
challenge
which was
remained that
time as the
dominant leader
with 82% of
market share in
the small-sized
car segment in
India.

8. Localization Strategy
 Local Adaptive Product Development
HMI started with a market research. Though primarily they
decided on Atoz as its initial production model. But The
customer response to Atoz was not very favorable.
Then Started with Examination of road conditions in India
(1) In the summer the temperature goes up to 40 Centigrade,
(2) Most of the roads are not well paved and are very dusty,
(3) In the rainy season with lack of sewage infrastructure the
car has to go through water overflowing roads.

9. HMI began a massive design
image improvement

10. vs
Maruti Suzuki’s HMI’s
producer centered,
 not customer driven.
 Highly customer driven
 Develop cars that fit Indian
weather, and road
conditions.
 90% major components
procured through
suppliers in India.

11. Linkage Competence
Technology competence Customer Competence
• HMI strengthened the
 cooling capability
 Air conditioning
functionality.
 The enhanced brake power
also supported the
suspension lifespan.
 HMI developed a car to be
waterproof and ECU to be
water resistant.
• HMI Reflected
 the requirements of Indian
customers.
 Service 24 hours a day, 365
days a year (AS) system.
 Marketing and service
dealerships.
 AS shops in remote areas.

12. Marketing and
Promotion
Extensive
dealership network
For-
Marketing
campaigns.
Building
showrooms.
Advertisement :
HMI put forth
Shahrukh Khan, a
legendary Indian
actor, as the
advertising model
for its products.
Khan’s advertising
effect was huge.

13. Second plant
 A second plant was constructed in 2007 to respond to the
increasing customer demand in India and increased the
production capacity to 600,000.
HMI deployed hospital vehicles and school buses also.
0
200000
400000
600000
800000
2005 2008 2010
Sales
Sales

14. HR policy
Recognition
 HMI hired Indian natives in high levels of
management leadership and in labor.
 Necessary education and training
 Formed a labor-management coordinative team with
a formal monthly collaborative meeting.
 India’s Supreme Court-reported HMI as excellent.
 2007 : ‘i10’ received the Car of the Year Award
 2008: HMI received awards in five categories of excellence.
 February 2009, HMC opened its global customer-centered websites
(http://www.hyundai.com).

15. Conclusion
 The real challenge of the localization strategy of these
(Hyundai) global firms is how to maintain their
organizational integrity while offering products and
services that fit the complexity and scale of global
market demand.