Hyundai Santro bids adieu yet again on rising prices and falling demand

With a sustained increase in vehicle prices and resultant falling demand from the entry car buyers, Hyundai Motor India has been compelled to pull the plug on the humble hatchback.

Some claim that the recent draft notification making it mandatory for M1 category vehicles – cars with seating capacity up to 8 passengers to have 6 airbags, may have been a critical factor in this decision.

It may not be viable for OEMs like Hyundai to invest in making low volume models comply with the upcoming safety regulation, added people in the know.

Relaunched in 2018 at a price of Rs 3.9 lakh to Rs 5.5 lakh, the latest generation of Santro with the BS VI engine has seen the prices rising by almost 20-30% to Rs 5.7 lakh to Rs 7 lakh ex-showroom over the last few years.

The car over the last six months was averaging around 1500-2000 units a month, making it unviable for a South Korean car maker to sustain the profitability on the model.

According to several people in the know, the last unit of the latest generation Santro was produced last week. The current Santro hasn’t been able to recreate the success story of its predecessor. Part of the reason could also be the evolution of the Indian passenger vehicle market with a growing demand for SUVs, and premium hatchbacks.

The development happens at a time, when the share of SUVs have overtaken hatchbacks consistently – making it the largest selling sub-segment in the market place.

In the first innings, Santro small car had established Hyundai Motor in India and remained one of the top selling models for many years. But the second inning has been short and weak due to low demand and the company has stopped its production. The move can be part of the OEM’s strategy to consolidate on sustainable, profitable models.

An email seeking response from Hyundai Motor India has remained unanswered till the publishing of this report.

Santro was the brand Hyundai entered India with in 1998. The ‘tall boy’ witnessed some facelifts and introduction of a more powerful, 1.1L engine during its first generation. Interestingly, the only tall boy in the country Wagon R has emerged as the best-selling car in India in fiscal 2022 with sales of 188,838 units.

Sales of the 2nd generation Santro were the highest in FY12 at an estimated 51, 514 units in the domestic market. During FY22, the model’s sales stood at around 23, 700 units. The current generation sold 1.46 lakh units over the past 4 years in the domestic market.