‘Share of entry-level cars is declining’
Automaker Hyundai’s latest offering is the performance hatchback i20 N Line, at a starting price of Rs 9.84 lakh. The interest in premium models and SUVs continues to rise, says Tarun Garg. He speaks to Venkata Susmita Biswas about the recovery of the auto sector, why premium cars are selling comparatively better than entry-level ones, and more.
Hyundai India sold 60,249 units in July, 2021 compared to 57,310 units in July, 2019. Has the domestic demand for four-wheelers returned to pre-pandemic levels?
Consumers are moving away from shared mobility and opting for personal mobility, and the rate of interest on automobiles is low. Further, the consumer’s confidence in tackling Covid-19 through social distancing, masking and vaccinations has created a positive sentiment for car sales. However, high fuel prices and the fear of the third wave are playing on their minds. From a demand point of view, performance of the sector in July and August indicate that we are almost back to pre-Covid levels. We will have to see how the issue with the supply of semiconductor chips impacts our ability to fulfill demand.
You launched the i20 N Line, which sports cosmetic improvements over the earlier model, in India recently. What prompted that?
We introduced the Blue Link connected car technology in 2019 with Hyundai Venue, and it is now available in seven models. As on date, more than one-third of our customers are choosing to instal Blue Link connectivity in their cars. The demand for sunroofs has increased since 2018 — from 13% to 30%. The sale of accessories, too, has doubled over the last two years. In general, consumers are willing to pay more for improved features. The Indian customer, led by the millennial generation, is rather internet-savvy and takes pride in the car they own. These factors motivated us to launch the N-Line range which is focussed on the image of the car and its sporty aesthetics.
Are people more driven towards buying premium models during the pandemic?
The logical assumption would have been that because of the economic distress, people were opting for entry-level cars. Instead, we have observed that customers are not willing to compromise on what they purchase, especially when it comes to cars. The time people spend in their cars is on the rise. For example, before the pandemic, a road trip holiday would not be longer than 200 km, but now people are travelling 500 km by car, because they choose to be in a safe environment.
The share of entry level cars is declining in the market. In fact, the trend of purchasing SUVs is growing unabated. The share of sales of SUVs has grown from 25% two years ago to 35.5% now. In the compact premium hatchback segment, the i20 range is showing strong growth. Within a model, it is the top trims that are selling the most. In 2019, the top two trims used to contribute 18%; this has grown to 36% in 2021.
As other car makers build their EV portfolio, does Hyundai plan to expand its own?
The movement towards clean mobility has begun; we launched the Kona in 2019. But the volumes in this segment are very low, and account for less than 1% of the overall market. India needs to develop the ecosystem of infrastructure like charging points for this segment to get a push. In two to three years, we plan to introduce a mass-market EV in India.
You launched a service for people to buy cars online last year. What kind of an uptake has that seen?
Currently, it is all about making this option available to people, and not getting affected by the outcomes of the initiative. Not all customers complete their car purchase journey online. We have had about 9,400 bookings through Click-to-Buy from April 2020 to August 2021. We are confident that the volumes will follow as we keep improving the service.
How do you plan to expand presence in the tier II and III markets?
We are reaching out to these markets through digital. Further, in addition to expanding our service workshop network, we have introduced mobile service vans for markets where we don’t have full-fledged centres. We currently have 1,330 service points across India. The mobile after-sales footprint in India includes 37 mobile service vans for tier III and IV towns.