Multiple uncertainties slowing car mkt: Hyundai

New Delhi:

Hyundai

India, the country’s second-biggest carmaker, has said that there are “multiple uncertainties” in the Indian market, which are limiting the

capacity

of companies to plan freely. The situation is so intense that “only a fortune-teller or an astrologer can predict”, which way the demand will be headed, a top official said.

Rakesh Srivastava, senior VP (sales and marketing) at the Korean car major’s Indian subsidiary, said that a number of decisions—demonetisation of high value currency notes and the ban on diesel engines earlier last year—have made the situation highly uncertain for carmakers.

The sudden changes in policy are affecting the capacity of companies to plan product launches, technologies and even fresh investments.

“The head of an auto company in India needs to be not only a statesman and an analyst, but also don the roles of a fortune-teller, an astrologer and a fire-fighter,” Srivastava told TOI. “He has to adopt these new skill-sets.”

The car industry has been passing through uncertain times and saw demand for diesel vehicles dip after the court ordered a ban on larger-engine vehicles. The share of diesel in total vehicle sales has been declining since and many companies have been saddled with baggage capacity, most of which had been installed when diesel demand was high.

Srivastava said that the uncertainties facing the industry include the fate of the proposed GST legislation that the government plans to introduce as a major tax reform. Also, there is not much clarity on what reforms and proposals might flow into the Union Budget that will be presented on February 1.

The company’s headquarters is mindful of these challenges. “Their awareness and involvement has heightened.”

India is the third-largest market for Hyundai globally and the company sold over 5 lakh units in the country last year, growing by nearly 5%. However, its sales have seen a decline (year-on-year) in both November and December, the fall being blamed on the cash crunch after demonetisation move. “The Indian market is becoming more challenging, and complex,” Srivastava said.

Asked to give a forecast on industry volumes for 2017, he said that the growth may be just around 4%. “For a market like India, this kind of performance will be surely below expectations. The Indian market provides an opportunity to grow between 8% and 12%.” He said that the performance of the Indian economy is also uncertain at the moment. “It is not growing consistently. Uncertainties are growing.”