Hyundai Motor introduced a new version of the Verna subcompact sedan in India, targeting to sell 45,000 units this year, as it seeks to boost profitability with higher-margin vehicles amid slowing volume growth.
The move also comes as rising incomes in Asia's third-biggest economy is lifting demand for entry-level sedans in the market, which has focused on small-sized cars.
The South Korean firm, which ranks second in Indian passenger car sales, has so far focused on small-sized cars such as the i10 and i20, and the launch of Verna marks its major push into a more profitable segment.
South Korea's Hyundai, which ranks fifth in global car sales along with affiliate Kia Motors , is enjoying robust sales helped by improved brand image and quality, and as Japanese rivals struggle to resume production following the March 11 earthquake and subsequent power shortages.
However, Hyundai is unable to keep up with roaring demand growth because of limited capacity. Hyundai executives have said the carmaker will tackle the challenge of easing volume growth by boosting sales of mid- and large-sized cars.
"Hyundai's plant in India, China and elsewhere are running at full capacity. Therefore, Hyundai is expected to pursue qualitative growth this year by improving product mix," said Suh Sung-moon, an analyst at Korea Investment & Securities.
"With rising incomes, the Indian auto market is upgrading from small cars to bigger-sized cars. With the Verna launch, Hyundai seeks to enhance its premium image in India and differentiate itself with local rivals," Suh said.
The rollout comes as higher fuel prices and interest rates, and vehicle costs threaten to further slow down sales growth in India, the world's second-fastest growing auto market. Car sales in the populous country grew at its slowest pace in nearly two years last month.
The Verna is expected to help Hyundai achieve sales of more than 400,000 units in India this year.
Hyundai's Indian unit sales will rise 15 to 17 percent in 2011 although overall market growth is poised to cool from last year's scorching 31 percent as rising prices and interest rates crimp demand, a senior official said.
Hyundai Motor last year sold 357,000 cars in India, representing around one tenth of its global sales and up 23 percent from 2009.
In China, Hyundai launched the Sonata mid-sized sedan last month and aimed to sell 50,000 of the vehicles this year, expanding its offerings from the Verna to take advantage of rising demand for larger-sized cars in the world's biggest auto market.
Introducing the new Hyundai Verna - A car that redefines style, luxury and power. Following a fluidic sculpture design philosophy that seeks to create cars that are inspired by nature and are based on the natural rhythm of life, it harmoniously blends power with style. With uninterrupted curves and a Coupe like sporty profile, the new Verna engages your senses with its very presence. Offering sleek good looks, advanced technology and groundbreaking safety features, this Sedan is a cut above the rest, and a revolution ahead.
Verna may sport a price tag of Rs 8-10 Lakh, which looks like a good buy for a car that looks big.