SUVs toast of nation, driving PV sales growth even post GST rate cut: Hyundai

New Delhi, Nov 4 (PTI) Sports utility vehicles are driving the growth of the domestic passenger vehicle segment with customers looking to upgrade to bigger cars rather than downgrade to smaller ones due to reduced prices post GST rate cut, according to a top Hyundai Motor India executive.

The company, which introduced an all-new version of its compact SUV Venue on Tuesday, said hatchbacks and sedans are part of the overall product mix, but are no longer the driving force behind the 43 lakh-unit-a-year domestic passenger vehicle segment.

Last week, Maruti Suzuki Chairman R C Bhargava stated that the GST rate reduction has sparked the revival of small cars, proving wrong the perception that Indian consumers have moved up to aspirational and bigger segments, and some of the car manufacturers are expected to revise their product mix.

Hyundai Motor India Chief Operating Officer Tarun Garg, who is set to take over as the Managing Director and CEO from January next year, cited data to note that it is the SUV sales which have grown post the GST rate rejig.

In the January-August period this year, the share of hatchbacks in the overall passenger vehicles sales stood at 22.4 per cent, he stated.

The share dropped to 20 per cent in October, he added.

On the other hand, the share of SUVs in the overall passenger vehicle sales has grown in the similar period, Garg said.

"So it can be seen very clearly that still the SUVs are the toast of the nation even after the GST rate cut. This is the real story. Actually it is the SUV mid large segment, which has seen maximum growth," he noted.

Garg stated that increasingly the Indian customer is upgrading to compact SUVs rather than downgrading to small cars.

"The customer has the same amount of money as before, and now, he can buy a bigger car with the same amount," Garg stated.

He noted that as a full stack vehicle manufacturer, the company would continue to sell entry level cars and sedans as the segment, though curtailed, remains significant in the 43 lakh domestic passenger vehicle industry.

Garg stated that SUVs now account for 71 per cent of the overall Hyundai Motor India sales.

The contribution can touch 80 per cent by 2030, he added.

Garg noted that the compact SUV segment, where Venue competes with the likes of Maruti Brezza, Tata Nexon and Kia Sonet, continues to grow with customers upgrading from small cars.

"The segment was around 80,000 units from January to August and grew to around 94,000 units in September and October. The GST tax benefits for small SUVs are significant with 13 per cent and 11 per cent tax reduction in diesel and petrol trims," he said.

He noted that the contribution of compact SUVs in the overall SUV segment is currently pegged at around 41 per cent. The SUV segment currently accounts for 57 per cent of the overall PV sales.

"The trend of customers upgrading to bigger and better models is evident with more first time buyers entering the compact SUV segment," Garg stated.

The all new Venue is priced from Rs 7.89 lakh (ex-showroom) and comes with both petrol and diesel trims mated with manual and automatic powertrains.

The company has sold 7 lakh units of the model so far.

The next-gen Venue, developed at an investment of Rs 1,500 crore, will only be produced at the company's newly commissioned Pune-based facility.

The plant is slated to have an installed production capacity of 2.5 lakh units per annum by 2028.

Garg noted that besides catering to the domestic market, the automaker is looking to export the new Venue to around 30 countries.

Replying to a query on the company's product strategy going ahead, Garg said Hyundai aims to be multi-powertrain firm with ICE, hybrid, CNG and electric models in its portfolio, catering to diverse customer requirements.

"From the company's global perspective, India is very important...all these 29 years, we have been an Indian company, but now even more after IPO..where cars are made by Indians, for Indians. And of course, now the company will also be led by an Indian. I think this is a very strong statement," he added.

On the company moving down from its long held second position in the domestic car market, Garg said capacity constraint turned out to be a major factor while noting that the automaker seeks a balanced growth.

"Numbers are very important, rankings are very important..the company aims to grow profitably, we want to have balance between domestic and export, balance between volume and profit," he added.

Hyundai Motor India aims to have over 15 per cent market share in the domestic market as per its 2030 growth plan.

When asked about the company's EV strategy, Garg said the company is focussing on enhancing the public charging infrastructure with plans to have 600 DC chargers by 2032.

He noted that the company is going for the complete development of the supply chain ecosystem having already localised battery packs.

"So we want to localise the entire supply chain, which we believe, along with the increase in volumes because of new models, will bring the overall cost down for EVs," Garg said.

Hyundai has announced plans to invest Rs 45,000 crore by FY30, aiming to make India its second-largest region globally.

Under the roadmap, Hyundai Motor India plans 26 product launches by FY30, including seven new nameplates, marking its entry into the MPV and off-road SUV segments.

The company also aims to roll out a locally designed, developed and manufactured dedicated electric SUV for the Indian market by 2027.

The company will also launch the luxury segment brand Genesis in India by 2027. PTI MSS HVA