Hyundai looks at 'double engine' boost on growth post GST rate cut

With the GST rate cuts expected to bring domestic sales back on a growth path, Hyundai Motor India Ltd is looking to ride on a 'double engine' drive of accelerated sales in the home market and continued momentum in exports, according to a top company official.

In the last six to eight months, when the domestic market was slightly sluggish, the company had pressed the accelerator on exports in contrast to the last few years when the focus was on meeting demand in India due to capacity constraints, Hyundai Motor India Ltd (HMIL) Whole-time Director and Chief Operating Officer Tarun Garg said in an interaction.

The company's domestic sales in the April-August period this fiscal were down 11.2 per cent at 2,20,233 units as against 2,47,992 units in the same period last fiscal. On the other hand, exports in the April-August period this fiscal grew by 12.45 per cent at 80,740 units as compared to 71,800 units in the year-ago period.

"We have been very strong in export, but in the last few years because of capacity constraints, the focus was more on domestic. However, when the (domestic) market was slightly sluggish in the last six to eight months, we pushed the accelerator on exports, and that is the flexibility we have," he said.

Stating that the "GST 2.0 reform could really give a fresh impetus to the economy and especially to the car industry", he said the company expects domestic sales to bounce back with both rural and urban markets accelerating.

"Rural market does well when monsoon is good, when minimum support price is good, when road infrastructure is improving and crop (harvest) is good. On the other hand, urban does well when sentiment is positive. Unfortunately, last one year, because of geopolitical issues and other factors, there were some pains and some stress coming in (the urban market)," Garg said.

He further said, "Now, with this huge drop ( in GST rate), I feel the sentiment will be very positive, not only the stock market, but even otherwise, and that will give a fillip to the urban (market) also."  In the case of Hyundai, he said, going forward both domestic and export will drive the growth.

"We had pushed the accelerator on export because domestic was seeing some kind of pressure. Now, while export (momentum) continues, domestic is also coming back to growth, and it will be a double engine thing," Garg noted.

He also said the capacity constraints that had hampered the company from focusing on both fronts will be resolved with its Talegaon plant in Maharashtra starting production.

The company currently has an annual capacity of 8.24 lakh units at its Chennai plant, he said, adding, "Another 1.7 lakh units capacity will come in October of this year (from the Talegaon plant), taking the overall capacity to 9.94 lakh annually, a jump of 20 per cent."  Another 80,000 units capacity will come at the Talegaon plant in FY28 taking the company's total capacity to nearly 11 lakh units annually, Garg said, adding it will "take care of the growth for the next few years for both domestic as well as exports."  Export contribution in terms of revenue last year was about 21 per cent, and it has jumped to 27 per cent in the first quarter of this fiscal, he said, adding, "Now with domestic also growing, it presents us a great opportunity."  With production capacity also coming at the right time, the company has enough headroom to cater to both domestic and export markets, Garg noted.