South Korean car major Hyundai has said the company is close to achieving its normal production volumes in India, riding on the increased demand for its vehicles amid the ongoing Covid-19 unlock phase in the country. With demand picking up month after month since May, Hyundai had started a third shift at both its production units in the Chennai plant from July end. In an exclusive interview with FE, Tarun Garg, Hyundai Motor India’s director (sales, marketing and service), who has been recently inducted on the company’s board as a wholetime director, said the company has been ramping up its capacity utilisation with month-on-month sales registering an increase. From zero unit sales in April and 6,883 in May to 21,320 in June and 38,200 units in July, the company has been reporting a constant rise in sales. In August, the company reported a close to 20% growth in domestic sales on a year-on-year basis, he added.
Before the pandemic, Hyundai India had been producing 2,500 cars per day, while it had a total annual capacity of 7.50 lakh cars. Hyundai had ceased all production activities even before lockdown 1.0 was formally announced. During the actual lockdown from March 24 up to May 8, there was zero production. On May 8, Hyundai recommenced production, making 200 cars on that day. Ever since then, Hyundai has been gradually ramping up production. For April to August, the carmaker retailed 1,22,945 units in the domestic market. In August, it retailed 43,535 units, a growth of 16% compared with July. Hyundai said the company maintains optimum levels of inventory with its dealers to meet customer demand. It has an inventory level of 35-40 days, which is an industry practice.
Garg further said the company believes that product diversity excites customers and brings them to car dealerships. In the last 18 months, Hyundai has launched eight new products in the Indian market – Kona, Venue, Elantra, Aura, Creta, Verna, Nios and Tucson. “We could grow the volumes in India because of our portfolio of new and range of products that give a slew of options even during these challenging times,” he said. According to Garg, Hyundai is perhaps the only company offering the BS-VI model in petrol, diesel, turbo as well as CNG versions.
Hyundai said it has become the market leader in three vehicle categories – SUV Low (Creta), compact SUV (Venue) and mid-high segment of sedan (Verna) during the April-August period. It sold 33,726 units of Creta; 20,372 of Venue; and 5,321 of Verna during the period. Though the entry-level cars – Santro, Grand 10 and Aura – were the crowd-pullers, the SUV segment has also been showing good demand. “In August, we sold 20,000 units in SUVs alone, with Creta and Venue getting good demand. In July too, we sold 18,000 SUV units,” he said.
Pointing out that diesel still plays a big role in its sales growth story, Garg said, in Creta, around 60% sales are happening in diesel, while in Venue and Verna it is above 30%. On the Covid-19 trends, Garg said customers are looking at flexible financing options. Those with low salaries want to pay a low EMI initially and show confidence of paying higher in the coming years. “For them, we have tied up with finance companies for a step-up scheme where in EMIs go up year after year,” he added.
There is cautious optimism in the auto sector, Garg said. Though Hyundai achieved a 20% growth in August, it came on the low base of August 2019 figures. With Covid cases increasing on a regular basis, there still are a lot of uncertainties. “We are happy our sales are showing good traction and month-on-month we are seeing growth, but we also know the coronavirus is still there,” he said. Hyundai has seen bigger growth in smaller towns than in the metros. Uttar Pradesh, Madhya Pradesh and Jharkhand have been doing far better than Maharashtra, Delhi and Tamil Nadu. “It may be because farmers’ income was less impacted; thanks to the monsoon and good crops, the rural economy has withstood the impact of the lockdown,” he said.
For the upcoming festival season, Hyundai is going to ensure adequate availability of cars with the dealers so that faster delivery can be achieved. “As supply chains are steadily improving, we will be able send more vehicles to dealers,” Garg said.
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