Hyundai under pressure from Tata, Mahindra as $3.5 billion India IPO looms

India IPO

Updated July 09, 2024

Hyundai is a ’true leader compared to competitors, holding first and second rank in many categories,’ Hyundai India CEO Unsoo Kim said during an investor presentation last week.

Hyundai faces competition from Tata Motors and Mahindra & Mahindra in India's car market, with Tata selling 13.2% and Mahindra 12.4% of all passenger cars last month.

Hyundai under pressure from Tata, Mahindra as $3.5 billion India IPO looms

Tata Motors Ltd. and Mahindra & Mahindra Ltd. are closing in on Hyundai Motor Co.’s second-place position in India, intensifying competition just as Hyundai prepares for a record $3.5 billion IPO of its local unit.

Historically, Hyundai has vied with Tata Motors for the second spot, but Mahindra, known for its robust SUVs, is steadily gaining ground as Indian consumers prefer larger vehicles.

Sales Competition

Hyundai accounted for 13.5% of all passenger car sales in India last month, compared to Tata Motors' 13.2% and Mahindra’s 12.4%, according to the Federation of Automobile Dealers Associations. Maruti Suzuki Ltd. remains the dominant player with a 40% market share.

This sales battle in one of the world's fastest-growing auto markets coincides with Hyundai Motor India Ltd.'s plans to gauge investor interest for an IPO expected in September or October. Such an IPO would be among Asia’s largest in recent years.

Hyundai India CEO Unsoo Kim highlighted the company's leadership in various categories during an investor presentation, while COO Tarun Garg noted the challenges foreign automakers face in India.

Hyundai is investing about 200 billion rupees ($2.4 billion) in developing electric vehicles in India and 70 billion rupees to operationalize its second plant by late 2025.

EV Initiatives

To attract eco-conscious consumers, Hyundai plans to launch an electric version of its popular SUV, Creta, in early 2025.

Meanwhile, Tata Motors is expanding its EV range with 10 new models by fiscal 2026. Mahindra is investing 270 billion rupees over three years to enhance its SUV and EV production capacity, aiming to launch nine SUVs and seven EVs by 2030.

Maruti Suzuki, despite leading the market, does not currently offer any electric cars. "If Hyundai loses market share, it can largely be attributed to its product range," said Deven Choksey, managing director at KR Choksey Shares & Securities Pvt.

Tata Motors and Mahindra, with their attractive designs and competitive pricing, present significant challenges for all carmakers in India today, Choksey added.