Why Hyundai Is Not Worried as Car Demand Slows In India

As there is a moderation in car sales, dealer stock levels across the entire industry have surged to alarming heights. However, the situation is under control at HMIL.

The passenger vehicle (PV) sales growth was higher than usual in 2022 and 2023 and therefore, some moderation now was "very natural" and it was not a cause for worry, Hyundai Motor India (HMIL) Chief Operating Officer Tarun Garg said recently.

The domestic PV wholesales of the Indian auto industry stood at 1.322 million units in the April-July period of 2024-25, recording an increase of just 1.8 per cent year-on-year (Y-o-Y), amid low demand.

"We have been in the industry for so many years. We all talk about how the Cagr (compound annual growth rate) has been five per cent for the last five years.

"In such a situation, when you see a growth of 23 per cent and eight per cent year-on-year (Y-o-Y), some kind of moderation is very natural.

"I don't think we should worry too much about that," Garg told reporters after launching the facelift of its three-row sport utility vehicle (SUV) Alcazar.

In 2022 and 2023, the domestic sales of PVs had increased by 23.1 per cent and 8.3 per cent year-on-year (Y-o-Y), respectively.

Garg said, "From January to August this year, HMIL's sales have grown by 2-2.5 per cent YoY. This is in line with what we had said at the Siam convention (at the beginning of the year)."

When asked about the price cuts that other car companies have made recently amid the downturn, Garg replied, "I cannot comment on others. We have not done any price cuts."

HMIL had in June filed a draft red herring prospectus (DRHP) with Sebi to dilute up to 17.5 per cent stake.

Market sources that the company plans to raise anywhere between Rs 20,000 and 25,000 crore. Garg refused to comment on any questions related to the IPO.

As car demand slows in India, dealer stock levels across the entire industry have surged to alarming heights. Garg, however, indicated that the situation is under control at HMIL.

"Our inventory... very clearly, we have gone on record to say that we always work with four weeks of physical inventory with dealers.

"Before the festival season, some plus or minus would happen...Our inventory, at the end of last month, was also four weeks," he said.

The Federation of Automobile Dealers Associations (Fada) recently said that the dealers in India currently have stock worth 70-75 days.

The situation is so serious that it has written two letters to the Society of Indian Automobile Manufacturers (Siam) in the past few months to resolve this matter.

Garg said that the company has launched its facelift Alcazar at a starting price of Rs 14.99 lakh (ex-showroom), which is lower than the current price of Rs 16.78 lakh of old Alcazar, as it wants to attract customers who want to enter this three-row SUV segment from mid-size SUVs like Creta.

"There was a very clear customer feedback coming that many of them, because of their lifestyle, want to buy a three-row SUV. They were unable to do it because of the lack of entry level options.

"That is why we have brought this entry level option," he said.

Feature Presentation: Ashish Narsale/Rediff.com