Hyundai (Accent) launch to trigger price war - Views on News from Equitymaster

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Hyundai (Accent) launch to trigger price war

Oct 16, 1999

Newsreports reveal that Hyundai will be launching its latest release (Accent) at a competitive price tag of Rs 535,000 (ex-showroom Delhi). Hyundai Motors (India) is a wholly-owned subsidiary of Hyundai Motors, South Korea. The company has presence in the small car segment (Santro) and with the launch of the Accent it now has a model in the competitive mid-car segment.

A Rs 535,000 price tag (basic model) for the Accent is very attractive, and will serve as a benchmark price for future launches by General Motors (Corsa) and Ford (Ikon). The competitive price is not a reflection on its quality, as company sources have been quick to point out that the Accent will provide the luxury of a Mitsubishi (Lancer) at the price tag close to that of Maruti Esteem. The company expects to draw customers from both the ends of the mid-sized car segment.

The competitive pricing of the Accent is good news for the consumers. Already car sales figures for the month of September 1999 (up 33% year on year) indicate that mid-car sales are on the upswing.

But whether demand revival in the mid-size car segment is a temporary phenomenon will be tested with the launch of Corsa, Ikon and station wagon version of the Fiat Sienna.

However, it is too early to comment on whether the slew of launches will expand the market, or manufacturers will only be eating into each other's market shares. If the future launches hover in the Rs 500,000-550,000 price range, this segment could see higher volumes. However, encouraging sales growth (although on a lower base) by Mitsubishi (Lancer) and Honda (City) seems to indicate that there is latent demand for premium cars (Rs 700,000-750,000).

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