Hyundai India predicts continued low single-digit growth for the car market in H2

The Indian car industry is expected to continue growing in low single digit growth in H2FY25 similar to the first half of the fiscal, Hyundai India's top leadership said in a post result briefing with the media on Tuesday.

As per Unsoo Kim, Managing Director of the company, post pandemic, the industry grew by more than 22% due to high pent up demand, and later by about 9%. "So obviously, some moderation was about to happen. And it is very, very normal." Kim noted.

Reflecting on the high-growth period, the top executive noted that all OEMs had collectively projected low single-digit growth for this fiscal year, as it follows a period with a very high baseline.

The situation is turning out exactly as it was expected, with the industry growing by about 3.9% during the January-October period. "So it is very much in line with the expectation. So what we are maintaining is that as regards the mid-term, long-term, absolutely there is no problem."

Even as the cyclicity of domestic demand continues to play, the industry is witnessing strong growth at macro level. For instance, a largely good monsoon combined with the marriage season and festive demand have helped in continuing the momentum. 

"So I think these are general things, which anyway obviously have a cyclical nature, but with the monsoon being very good and with October being so good, not only for Hyundai, but for the overall industry too, as you know, the registrations in October were much, much better, almost 30% better than last October. So I think the industry's inventories are reasonable and we should expect that the trend of low single-digit growth should continue in H2 of this year as well" the top executive said.  

Noting the challenges, Tarun Garg, Chief Operating Officer of Hyundai Motor India stated that high interest rates, high base, and an unfavourable geopolitical situation have been headwinds. He acknowledged that geopolitical uncertainties have persisted– particularly the protracted conflicts in Russia-Ukraine and the escalating tensions in the Middle East, including the Red Sea crisis. “These conflicts have dampened consumer sentiment,” he explained. 

Hyundai also reported a decline in its average selling price (ASP), with domestic ASP hovering around Rs 7.7 lakh and export ASP at approximately Rs 7.5 lakh in Q2FY25. The management attributed this decrease to the geopolitics-related headwinds, which, combined with rising logistics costs and currency fluctuations, have impacted overall price realization. "The geopolitical situation did impact the ASP," the management explained.