Auto Slowdown: Hyundai India Chief Bats For GST Rate Cut To Trigger Recovery
A combination of various factors has resulted in auto sector slowdown in India, and an immediate government intervention in the form of a Goods and Services Tax rate cut can help bring back growth in the industry, Hyundai Motor India Pvt. Ltd. said Tuesday.
While the upcoming festive season may result in better auto sales, government help can trigger a recovery this year itself, said SS Kim, chief executive officer and managing director of Hyundai Motor India.
“If the government helps at this stage, I believe that the recovery can happen within this year,” he said on the sidelines of the launch of the Grand i10 Nios in New Delhi.
When asked if the company would like the government to reduce goods and services tax on automobiles, as has been demanded by industry body Society of Indian Automobile Manufacturers, he said, “Absolutely”.
According to Kim, such a positive step was necessary under the current circumstances in order to make “people come forward”.
He listed a “combination of various challenging situations”, including the transition to Bharat Stage-VI emission norms, new and mandatory safety features, credit crunch for vehicle loans, and higher ownership costs, as responsible for auto slowdown in India.
“I believe that this phenomenon (current slowdown) is a cyclic phenomenon and not a structural one,” said the Hyundai India CEO. The auto market in India has bottomed out and there will be only positive growth, going forward, he said.
Kim said that while India may have its own priorities, in other countries, the automotive industry is considered crucial for the overall economy—considering employment and economic opportunities it creates in the ecosystem.
“Currently, we have no plan to reduce headcount or lay off some temporary workers. Instead, we are trying to manage our labour force at the optimum level,” Kim said. “As a future-oriented OEM, we are trying to hire many people in many areas, such as mobility service solutions, research and also some new business areas such as electrification.”
He said the company had only two non-production days in August to adjust output and it is not looking at taking such steps again in the near future.
“Even though we are passing through some difficult times, it is a short-term trend. Eventually, India will be the future for growth. India from an OEM perspective offers huge growth potential,” said Kim.
In terms of car penetration, India stands at 22 per 1,000 people as compared to 160 in China, 600 in South Korea and almost 800 in the United States.
Domestic sales of passenger vehicles fell 30.98 percent year-on-year to 200,790 units in July, according to data released by the Society of Indian Automobile Manufacturers. That’s the steepest decline since December 2000 when passenger vehicle sales fell 35.22 percent, SIAM data showed.