GST cut gave a fillip to SUVs, not small cars: Hyundai COO Tarun Garg

Hyundai's Tarun Garg said small cars' share in PV sales has continued to fall despite GST rate cuts, with SUVs driving most of the market's growth and consumer upgrades

Hyundai Motor India’s chief operating officer (COO) Tarun Garg said on Tuesday that GST reforms gave a fillip to the sales of SUVs while the share of small cars -- hatchbacks and sedans -- in overall passenger vehicle (PV) sales continued to shrink, a remark that contrasts sharply with Maruti Suzuki Chairman R C Bhargava’s recent optimism on the segment.

 

Bhargava had last Friday said that small car sales had surged sharply after the GST rate cuts, adding that the rebound could even push other carmakers to bring hatchbacks back into their product line-ups.

 

Garg, however, said, “There is a narrative going on how the GST cut has impacted car sales... In the January-August period, the share of hatchback in the overall PV industry sales was about 22.4 per cent. In the September-October period, the share of hatchbacks has come down to 20.4 per cent. In just October, their share was just 20 per cent. This is simple wholesale data from industry body SIAM.”

 

Garg, who is set to become managing director and chief executive officer of HMIL from January 1, was talking to reporters here after the launch of facelift of compact SUV Venue at a starting price of ₹789,900 (ex-showroom).

 

He said that even the share of sedans has fallen after the GST rate cuts.

 

“In the January-August period, the share of sedans in overall PV industry sales was 8.5 per cent. In the September-October period, its share reduced to 8.2 per cent. And in October, its share was just 7.9 per cent,” he noted.

 

“So, I don’t know about that narrative outside but it is, very clearly, still the SUVs only that are in high demand. In the January-August period, the share of SUVs in overall PV industry sales was 54 per cent. In the September-October period, its share increased to 56.9 per cent. And in just the month of October, its share increased to 57 per cent,” he mentioned.

 

“It is still the SUVs that are the toast of the nation. This is the real story. And actually, it is the mid-large SUV segment, which has seen the maximum growth after the GST rate cut... The contribution of hatchbacks in the overall PV industry sales continues to come down,” he noted.

 

The mid-SUV segment saw its share increase from 12.8 per cent in the January-August period, to 14.2 per cent in the September-October period, to 15 per cent in just the month of October, he informed.

 

He explained the reasons behind this change.

 

“The customer had the same amount of money earlier and now. However, he or she can buy a bigger car now. The trends indicate that the customer is upgrading rather than downgrading...It is still all about aspiration,” Garg noted.

 

The COO said that most of the new models in the coming years by car companies would be launched in the SUV segment only. However, the hatchback segment is important for Hyundai.