Newly listed Hyundai Motor India is witnessing "flattish growth" in car sales in urban areas, according to Tarun Garg, whole-time director and chief operating officer at Hyundai Motor India.
“Growth overall has been modest at 1%, and most of it is coming from rural markets. Our rural penetration has grown to nearly 21%, up from 20% last year, supported by favourable monsoon, growth in infrastructure and minimum support prices. In urban areas, we are seeing a flattish growth. Whenever there’s macro-economic uncertainty, urban demand can see moderation, but it hasn’t contracted,” Garg says in a media conference call after the company announced its second-quarter earnings.
The CAGR for the Indian auto industry over five or even ten years stands at 5%, says Garg. However, after COVID-19, there was significant pent-up demand, leading to growth of over 22%, and then about 9%, he says.
“A slowdown was inevitable, and it’s normal. At the beginning of the year, we forecasted low single-digit growth due to the high base. From January to October, the industry grew by about 3.9%, in line with our expectations. This shows the resilience of the industry. In terms of H2, we expect low single-digit growth to continue, supported by solid performance in October, where registrations were up by nearly 30% from last year. Inventory levels are reasonable, and we are optimistic,” says Garg.
High interest rates continue to impact consumer financing, with 75-80% of cars being financed, explains Garg. “After two years of high growth, there was bound to be some moderation, though demand levels are still strong. On the export front, we face challenges due to geopolitical tensions, which were unanticipated and have persisted longer than expected. However, our diversified export base across 80 countries helps balance any regional impacts. We're cautiously optimistic and expect low single-digit growth to continue in the coming months,” says Garg.
Hyundai is betting big on premiumisation and sport-utility vehicles (SUVs). SUV contribution has risen from 60% last year to 68.6% currently. The carmaker has also seen a rise in demand for automatic transmission and sunroofs. “Our sunroof penetration has increased from 47.4% in H1 last year to 53% this year. ADAS adoption has risen from 3.3% to 14.4%, and automatics have increased from 23.2% to 25.3%,” says Garg.
Hyundai Motor India posted a 16% dip in its consolidated net profit to ₹1,375 crore for the second quarter ended September 30, 2024, dented by lower domestic sales and exports. The South Korean carmaker had reported consolidated net profit of ₹1,628 crore in the corresponding period last year.