Car sales won’t pick up without support from government: Hyundai India chief

Updated: August 21, 2019 6:54:29 AM

There has been no layoff at our factories so far as we have a responsibility towards our employees too. They have to be supported in tough times. As far as dealerships are concerned, we have, in fact, increased our number of dealerships from 490 in January to 502 now.

SS Kum, MD and CEO, Hyundai Motors India, Hyundai, auto sector,  Demand, job loss, SS Kum, MD and CEO, Hyundai Motors India

By Pritish Raj

Hyundai Motor India, which recorded its highest-ever profit from Indian operations in FY18, expects bottomline to take a hit
in FY19 owing to the slowdown in sales. SS Kim, MD & CEO, HMIL, in an interview with Pritish Raj, said he doesn’t expect demand to get back to normal during the coming festive season, unless the government provides some fiscal support. Excerpts:

Car sales have fallen to a two-decade low, Onam is around the corner, but it’s a complete washout and inventory is still higher than normal. What is your expectation from this festive season?
While I think the demand may get slightly better this festive season, it cannot completely get back to normal unless there is government support. Right now, it is important to melt down customers’ frozen mindset in terms of their purchase decisions. The overall economy is going through a slowdown, and to revive it, a stimulus package such as GST or a cess cut is critically important. Without a support, it will take longer time for demand to improve.

But the government says the GST cut will have significant implications in its revenue collection. If the demand scenario is so bad, why can’t manufacturers cut prices and let go of part of their margins for a temporary period to push sales?
We are doing as much as is possible by way of discounts and other offers. Not to mention, dealers also have to be supported who are stressed right now and a lot of our money is going there. I don’t think we are making big profits at this time, in fact, we are taking a hit on our profitability which we could have otherwise made in normal demand conditions. Also, the prices of existing products are not being increased, even though the input cost is going up.

The slowdown has led to dealers shutting shop and contract workers are being asked to leave by OEMs, component makers and dealers. How many temporary workers did Hyundai had to let go?
There has been no layoff at our factories so far as we have a responsibility towards our employees too. They have to be supported in tough times. As far as dealerships are concerned, we have, in fact, increased our number of dealerships from 490 in January to 502 now. Despite a slowdown, this was done to expand the reach of our products.

Read| Hyundai launches Grand i10 Nios priced up to Rs 7.99 lakh

Hyundai had recorded its highest-ever profit in FY18 from its India operations. However, the fall in sales started after that and continued for most part of FY19. Will it be fair to say the profits will contract in FY19 due to lower sales?
Yes, and that is because there has been an increase in sales and promotional expense which will certainly affect the bottomline. We had to support the dealers financially and offer huge discounts to customers. But we are trying to increase our export, hoping that it would compensate for the loss in domestic market.

Many OEMs have either cut or deferred their planned investments for this fiscal owing to a sombre outlook. Has there been a change in Hyundai’s investment plans?
We already committed a long-term investment in January and long-term investments are not tweaked due to short-term disturbances. So far, there is no change in our investment plans.

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