The demand slowdown in the market is ‘very much cyclical and not structural’, says Seon Seob Kim
Kim said such a positive step was necessary under the current circumstances in order to make 'people come forward'
NEW DELHI :
The ongoing slowdown in India’s automobile market is transient and government intervention can drive a turnaround in the coming quarters, especially during the festival season, said a top executive of Hyundai Motor India Ltd.
With automobile sales on the decline for about a year, companies have been urging the government to either reduce the goods and services tax (GST) on automobiles, or offer some other financial relief to revive demand.
“The festival season might be a great opportunity for Hyundai and all other OEM’s (original equipment manufacturers) in terms of recovery of demand and revival. In many areas, the customer sentiment is subdued and we are preparing interesting customer communication programmes," said Seon Seob Kim, managing director and chief executive, Hyundai Motor India.
Wholesale dispatches of passenger vehicles fell 31% from the year earlier in July to 200,790 vehicles, according to the Society of Indian Automobile Manufacturers. It was the sharpest drop since the 35% fall in December 2000. July also witnessed the ninth straight drop in monthly wholesale passenger vehicle sales.
Sales have fallen in 12 of the 13 months since July 2018, underscoring the sharp slowdown in demand in the world’s fourth-largest automobile market.
Kim said the slowdown in the local market was “very much cyclical and not structural". From an OEM perspective, India still has huge growth potential and the number of cars sold per 1,000 people is very low compared to the US, China and South Korea. This means that even if the domestic market is passing through a difficult time, it is going to be a very short-term trend, he added.
A range of factors, such as higher ownership costs and economic uncertainties, have led to a decline in auto sales in India. Companies are hoping that sales will recover during the festive season, which starts with Onam in September and ends with Diwali in late October.
“If the government helps at this stage, I believe the recovery can happen this year itself. The burden on customers has increased when it comes to purchasing cars due to increase in insurance premiums, registration charges and then BS VI transition. This has not been done intentionally, but yes, it has an impact," Kim said.
At a time when other manufacturers have cut production, Hyundai has grown its overall market share to a record 19.4%, he added. The company is leading the sports utility vehicle segment for the first time in two decades of its existence in India thanks to demand for its compact SUV, Venue.
Hyundai Tuesday introduced its latest offering in the small car segment, the Grand i10 Nios, costing ₹4.99-7.99 lakh. It was the firm’s third launch since January after Venue, and electric SUV Kona.
The Grand i10 Nios is based on a new platform compared to the existing Grand i10 car and will have BS VI complaint petrol and BS IV diesel engine versions. Since 2013, the South Korean manufacturer has sold more than 751,000 Grand i10s in India.
“Our rate of (sales) decline is much smaller than that of those of other OEMs and that has led to the increase in our market share to 19.4%, which is the highest-ever. Automotive industry is a key contributor in some of the major economies and huge contribution comes from the value chain companies as well," Kim said.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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