Updated: November 6, 2020 9:13:37 am
In October, Hyundai Motor India announced sale of 56,605 units in the domestic market — its highest ever monthly sale. Seon Seob Kim, MD and CEO of HMIL, told Sandeep Singh that while the industry has been witnessing high demand from first time buyers and additional purchase by families as they are looking to avoid public transportation, the demand in the long term will be driven by economic growth and per capital income. Edited excerpts:
You have witnessed a surge in demand. Where is the demand coming from?
There is an increasing trend of first-time buyers and additional purchase by families as people don’t want to expose their family members to public transportation. We have also seen a decline in exchange buying as people want to hold on to their existing cars. The demand is both in entry level cars and our SUVs.
We feel people are saving on various expenditures such as eating out, traveling, entertainment etc and as private safe mobility has emerged as a primary need, they are spending on that. It has led to an uptick in demand for vehicles. The overall pie itself is increasing and customers who did not think of buying a car earlier are now coming to buy an entry level car.
Do you see economic growth constraints will start having an impact on sales soon?
Our study shows that almost 1 million people deferred their car purchase in the period between March to July leading to a big pent up demand and we estimate that almost 70 per cent of them will purchase in the near future. While some of them have already purchased in Q3 of calendar 2020, we expect that demand to last till Q1 of calendar 2021. After that the demand will depend on economic factors. Ultimately, the general demand will be determined by macroeconomic indicators and per capita income and so the growth after Q1 of calendar 2021 would be determined more by macroeconomic factors and growth.
But, I am quite positive on the long term prospect of demand in the Indian markets.
Has rural market been a big growth driver?
We have seen that agrarian states have shown higher growth in the period between May and October. States, where dependency on agriculture is 40 per cent or more, they have shown 50 per cent higher growth than others. So states such as Punjab, Haryana, Rajasthan, Madhya Pradesh, Himachal Pradesh and Jharkhand have done very well. On the other hand Delhi, Tamil Nadu and West Bengal have not done well
We have seen a strong comeback of demand in big cities in October with the arrival of festive season. Opening of economy means higher mobility needs, people have to go to offices and that is leading to increase in demand.
Globally we are seeing trend where manufacturers are moving away from diesel but you are introducing it in all cars and have now introduced in i20 after having discontinued. What is the way forward for Hyundai strategically on diesel front?
I think that as long as the customer demand is there and we have technology that meets all regulatory and emission norms, we have a responsibility to serve the customer demand.
We have seen that there are segments where diesel is doing extremely well and in some states such as Maharashtra, Andhra Pradesh, Uttar Pradesh, Telangana and Punjab customers really prefer diesel. Hyundai’s strategy has always been to offer the choice to each and every customer.
What is the progress on electric car for India?
While we have introduced electric models in various markets, there is some delay here due to factors relating to pandemic, charging infrastructure, pricing and supply chain. We are preparing and our mass EV should come in a few years and by 2025 we plan to have 25 EVs that includes EV, hybrid and even fuel cell car.
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