It was 1998, and Bollywood actor Shah Rukh Khan was everywhere. Among his many appearances that year, one stood out for the auto industry — the advertisements for a compact, tall-boy hatchback called the Santro, priced at Rs 2.99 lakh. Nobody saw then what that car would set in motion.

Three decades on, Hyundai has launched scores of models, listed on Indian bourses, and survived, even thrived, through the churn of one of the world's most demanding car markets. But a new chapter is underway, and it is not an easy one.

Global players have deepened their India footprint. Domestic manufacturers, riding a powerful wave of vocal-for-local sentiment, have sharpened their edge with new products and technology. And Hyundai has slipped, losing its long-held second position in FY2025-26 to fall to fourth.

A Gap Too Wide To Ignore

According to the Society of Indian Automobile Manufacturers data, just four years ago, Hyundai sold more than double the volumes of Mahindra & Mahindra (M&M) and maintained a gap of over a lakh units with Tata Motors. The stakes got tougher in the years that followed, but it managed to stay ahead as recently as FY2024-25.

However, in the last fiscal year, Hyundai fell short of its rivals by over 75,000 units, enough to surrender a position it had held for the better part of two decades.

"We have every intention to come back to the number two position," Hyundai’s Managing Director and CEO, Tarun Garg, said during a media interaction following the company's FY26 earnings last week, stopping short of putting a timeline to it.

"Now, which year and all depends on so many other things. Not only on us, the competition, etc,” Garg said. “We would not like to make any claim as such. But yes, we are very passionate about our position. And we will get it back, sooner than later."

The plan hinges on the product strategy. For the ongoing fiscal year, Hyundai has announced two new SUV nameplates, a deliberate push to spread its presence across price points rather than depending heavily on a handful of high-volume sellers like the Creta and Venue.

"One will mark the debut of our new localised dedicated EV in the compact SUV space…the other will further expand our presence in the ICE SUV segment,” Garg said. With this, the company is targeting an 8-10% domestic sales growth in the current fiscal.

The two new SUVs are part of over two dozen product launches planned through FY30, announced at the company's Investor Day 2025. Hyundai is also set to bring its luxury brand Genesis to India next year.

Meanwhile, Hyundai's electric vehicle (EV) story currently remains a work in progress.

EVs account for just 1% of the carmaker's domestic sales, well below the industry average of nearly 5%. Its electric portfolio is thin, including the Ioniq 5 at the premium end and the Creta EV in the mass market, with the Kona Electric quietly discontinued five years after its 2019 launch. Hyundai also has no hybrid offering for the Indian market.

Garg acknowledged the gap. "We don't have a fully dedicated mass-volume model," he said, before pointing to what comes next. "I believe the new dedicated EV will bring a very strong addition to our EV portfolio.”

Meanwhile, Hyundai's troubles are not limited to sales volumes and market share. The company's annual profit fell for a second consecutive year in FY 2025-26. Rising commodity prices and steeper discounts, forced by intensifying competition from domestic rivals, have weighed heavily on the carmaker.

Consolidated net profit fell to Rs 5,431.5 crore in FY26, down from Rs 5,640 crore in FY25, which was itself a 7% drop from Rs 6,060 crore in FY24, a sobering milestone coming barely 18 months after its October 2024 stock market listing.

From Upstart to Benchmark

Founded by Ju-yung Chung in 1967, South Korean parent Hyundai Motor Company (HMC) built its first car, the Cortina, in partnership with American automaker Ford. Its first domestically produced vehicle, the Pony, rolled out in 1975 using Japanese Mitsubishi powertrain technology. The automaker continued licensing Japanese designs through the 1980s, before developing its own engine in 1991.

The company’s India chapter began on May 6, 1996, when Hyundai Motor India Limited (HMIL) was incorporated. Two years later, the Santro arrived, and with it, a relationship that has lasted three decades.

Shah Rukh Khan remains Hyundai's brand ambassador to this day, widely regarded as the longest-running partnership between a Bollywood actor and a carmaker in Indian automotive history.

But the India that Hyundai entered was a far simpler competitive field. The market had just five significant players, namely Maruti Suzuki, Premier, Hindustan Motors, Tata, and Mahindra, with Ford, Opel, and Honda having arrived less than a year earlier.

Maruti had awakened the market, but had not yet faced a real challenger.

"Hyundai did its homework before entering the market. It built the aftersales network and focused on the supplier ecosystem before anything else. Santro was a killer product," recalled Tutu Dhawan, an auto industry veteran.

The ambition went beyond the car itself. Hyundai arrived with warranty terms designed to build trust in a brand Indian buyers had never heard of.

Following Santro’s tall-boy format, Maruti pivoted to the WagonR almost immediately, and suddenly, features, warranties, and customer experience became competitive edges rather than afterthoughts.

"Hyundai didn't just launch a car. It raised the bar for everyone," Dhawan told The Core.

But what once set Hyundai apart may no longer be enough.

The Cost Of Looking Away

The numbers lay bare the scale of the divergence. From FY10 to FY26, Hyundai's annual production crept from 5.89 lakh units to 7.69 lakh units, an addition of just 1.79 lakh units over sixteen years. Maruti Suzuki, over the same period, scaled from 10.27 lakh units to 22.88 lakh units, adding 12.60 lakh units and more than doubling its output. Hyundai's production has remained largely static as the market around it grew; Maruti, by contrast, has transformed its scale entirely.

An industry insider said the reasons trace back to a strategic misalignment. During the past years, HMC was more focused on China and ASEAN markets than India, and that bet has not paid off. ASEAN stalled, and in China, homegrown electric vehicle makers have squeezed Hyundai out of a meaningful share. India, meanwhile, grew faster than almost anyone anticipated, and Hyundai was not fully positioned to capitalise on it.

In October last year, HMIL commenced production at its new manufacturing facility in Talegaon, Maharashtra, acquired from General Motors. This will add 1.70 lakh units of annual capacity. Combined with its existing plant in Sriperumbudur, Tamil Nadu, which has a capacity of 8.24 lakh units, the carmaker's consolidated annual production capacity in India now stands at approximately 9.94 lakh units.

Hyundai currently exports to over 60 countries from India, but its reach is largely confined to emerging markets. The push on exports, while credible, has not cracked the high-value destinations of the US or Europe, and may never do so. Korea remains the parent company's primary hub for North America and Europe, effectively capping how far Hyundai India's export ambitions can realistically stretch.

For a company that once exported more volumes than Maruti Suzuki, until FY21, Hyundai's export performance has been underwhelming. According to a recent ICICI Securities report, volumes have grown at a compound annual rate of just 8% over the last three years, and have effectively stagnated over the longer term, declining at 2% and 1% over the last ten and five years, respectively. Capacity constraints have been the primary drag, leaving Hyundai trailing peer Maruti Suzuki on this front.

The addition of capacity at its new Talegaon plant may offer some near-term support to export growth, though potential is likely to remain capped, ICICI said.

Foundations That Have Not Cracked

Yet the company has not lost its foundational strengths. "Hyundai's after-sales service network remains arguably unmatched in the industry. Its products command strong resale value, and parts availability has never been a concern for owners. These are durable advantages, built over three decades," Gaurav Vangaal, Associate Director at S&P Mobility told The Core.

Hyundai was also among the earliest to read India's premiumisation wave. In 2018, it wound down the Eon when the model proved unviable against incoming crash test and BS-VI emission norms; in 2022, it discontinued the Santro as rising costs, tightening safety requirements, and softening demand made it impossible to sustain profitably. Each exit, in hindsight, was a calculated bet on where the market was headed.

"We will go where the customer is," Tarun Garg, then Director of Sales and Marketing, told this reporter in 2022. "It is important to trace the customer trend three to four years before it becomes an actual trend. Today, first-time buyers are moving away from hatchbacks, and most of them are moving towards compact SUVs."

The premiumisation strategy has helped the carmaker to improve its margins, and the SUV bet paid off most spectacularly with the Creta. Launched in 2015, the mid-size SUV has held its segment leadership for nearly a decade, a position no rival has managed to unseat.

"Creta did for Hyundai in the 2010s what Santro did in the 1990s– pure magic," Dhawan said.

A Portfolio Running on Fumes

Where Hyundai has ceded ground, Vangaal argued, is in the excitement of newness.

“Lifecycle upgrades have come, but fresh nameplates have not, and in a market where Tata and Mahindra have been relentlessly launching new products and stoking buyer anticipation, that absence has been felt,” he said.

Over the past five fiscal years, Hyundai has expanded its portfolio with six new nameplates including Venue, Exter, Aura, Alcazar, Ioniq 5, and Kona Electric. Five existing models, including the Grand i10 NIOS, i20, Verna, Creta, and Tucson, also underwent full model changes.

But sales volumes tell a more sobering story. Barring the Venue launch and the Creta's full model change, most new launches have met with lukewarm success. The Exter and Aura generated modest volumes, but overall the product launch strategy has deepened the company's dependence on a handful of models to carry its volume and market share.

"HMIL has successfully tapped into the premiumisation trend early, but has lost market share in the domestic utility vehicle market amid stiff competition and an over-reliance on Creta," ICICI said.

It added that the upcoming new products could augur well and drive the domestic market share, but “success of the new launches remains a key monitorable.”

If the new product pipeline does not deliver, the risks could be stark. As an industry observer put it, Hyundai's Creta risks becoming the Bajaj Chetak, which was a once-iconic product that defined a generation, only to be overtaken by the market it helped create.

ICICI also pointed to a risk closer home. Hyundai and Kia India share the same parent company, along with common R&D, sourcing, and platform architecture. The concern is that, if Indian buyers increasingly gravitate toward Kia's design and styling, the sales lost by Hyundai may simply move to Kia. While this would be a gain for the group on paper, it would not translate to the kind of growth Hyundai needs in India.

A High-Stakes Game

"Hyundai has spent decades building a deep experience of this market. The product offensive may look slow right now, but the planning never stops. Consumers may not see it coming, but the company could pull a rabbit out of the hat," Dhawan said.

However, Vangaal noted that Hyundai may not fully regain its lost market share given the intensifying product offensives of its competitors. Any gains from new launches are likely to be marginal and unsustainable in the longer term, unless Hyundai brings multiple new products to market in quick succession.

There is also a leadership dimension to watch. From January 1 this year, Tarun Garg officially took charge as Managing Director and CEO, becoming the first Indian national to hold the top position at Hyundai's India unit since its establishment. For an organisation navigating a critical inflexion point, the symbolism is not lost on those tracking the company.

The leadership appointment, industry watchers suggest, brings with it both opportunity and pressure to reclaim lost ground, and to do so on home turf, under Indian leadership, in a market Hyundai once defined.