Hyundai looks to step up exports of PVs amid tepid domestic sales2 min read . Updated: 24 Sep 2019, 11:32 PM IST
- Carmaker aims to maintain a 20% increase in passenger vehicle exports from India in this fiscal year
- Auto demand in India is expected to stay subdued till the next fiscal on rollout of BS-VI norms
NEW DELHI : Hyundai Motor Co. is aiming to maintain 20% increase in passenger vehicle (PV) exports from India in this fiscal year, said a senior executive of its local unit.
The strategy will likely allow the South Korean automaker to partly offset the year-long weak sales in India. Automobile demand in India is expected to stay subdued till the next fiscal year as the introduction of Bharat Stage VI (BS-VI) emission norms from April 2020 will result in higher vehicle prices, further forcing potential buyers to defer purchases.
Hyundai, the second-largest automaker in India, is also the biggest exporter of vehicles catering to around 90 countries across Africa, West Asia, Latin America, Australia and Asia Pacific from its plants in Chennai.
Puneet Anand, group head and senior general manager, marketing at Hyundai Motor India Ltd, said the car maker has a flexible structure and with its domestic sales falling 7.5% in the first five months of this fiscal year, it managed to grow exports by 20%. This has ensured optimal capacity utilization at its factories.
“With BS-VI norms coming in, there will be certain uncertainty in the market and this flexibility in operations is helping us beat the downturn. This year, we will maintain 20% growth in exports since we get the orders three months in advance for exports and our production has been planned accordingly," Anand said.
As part of that plan, the company will begin exports of its latest products comprising the Venue sport utility vehicle (SUV), Grand i10 Nios and Santro hatchbacks from December.
India is a key destination for Hyundai since it exports to a large number of countries from Chennai. Exports also help the company maintain profitability of the Indian unit when sales in the domestic market decline significantly.
Hyundai India’s exports grew 20% year-on-year to 86,300 units during April to August 2019.
Automobile sales in India declined for the tenth month in a row in August because of factors such as a credit squeeze, economic slowdown, farm distress and rising ownership costs. This has forced companies to scour for ways to better utilize their spare capacities and maintain profitability.
Factory dispatches of vehicles by Hyundai fell 16.5% from the year earlier in August to 38,205 units, and sales are expected to remain muted in the festive months of September and October. Hyundai, though, has grown its market share to about 19% on the back of healthy demand for its first compact SUV, Venue.
Domestic sales of passenger vehicles plunged 31.6% in August to 196,524 units from a year earlier, according to data from the Society of Indian Automobile Manufacturers (Siam). It was the worst sales performance since Siam began compiling monthly sales data in 1997-98.
In a bid to revive demand, the Prime Minister Narendra Modi-led National Democratic Alliance government has announced several measures in the last one month. These include mandating government agencies and departments to replace older vehicles, increasing depreciation on new vehicles for commercial fleet providers, urging banks to lower rates for automobile loans, and boosting credit availability to non-bank lenders. Automakers, though, are bracing for two straight years of subdued sales during the festival season. Festive sales are crucial for automakers as they make up a third of their annual sales.