Hyundai India Comfortable With Current Inventory Amid Muted Sales, Says COO

Hyundai Motor India Ltd. is comfortable with its current inventory levels, its top executive has said, even as the wider industry grapples with a stockpile that’s growing faster than sales at the showroom floor.

“Our inventory levels are still at less than a month,” Tarun Garg, chief operating officer at Hyundai Motor India, told NDTV Profit during a virtual press conference on Saturday. The company has a stockpile of 44,774 cars, equivalent to 3.5 weeks of buffer, according to him.

Therefore, the question of discounts—as announced by larger rival Maruti Suzuki India Ltd. on some of its automatic models—does not arise at all, Garg said.

“Our automatic cars are witnessing enough demand. In fact, the contribution of automatics to our overall sales has increased from 18% a year ago to 25% now,” Garg said. “There’s no question of discounts, definitely not in the near-term.”

On Saturday, Maruti Suzuki—India’s largest carmaker by volume—reduced prices by up to Rs 5,000 of the automatic variants of the Alto K10, S-Presso, Celerio, Wagon-R, Swift, DZire, Baleno, Fronx and Ignis models. Channel checks by NDTV Profit had previously revealed that some of these models are getting piled up at dealerships.

The question of an inventory build-up, or lack thereof, come at a time when Hyundai India has been consistently clocking 60,000 units per month for some time now, though the momentum is now ebbing.

In May 2024, domestic sales of Hyundai India rose 1.13% year-on-year to 49,151 units, as against 48,601 units in the year-ago period. Exports rose 31% to 14,000 units due to a low base. Total sales surged 6.63% year-on-year to 63,551 units versus 59,601 units during the same month last year.

“We have maintained a healthy total sales volume in May 2024, despite a week-long routine bi-annual maintenance shutdown at our Sriperumbudur factory,” the COO said. “SUVs continue to be a growth driver, accounting for more than 67% of domestic sales last month. Our rural penetration stood at a healthy 20.1% in May.”

Indian car dealers are staring at an inventory of up to 5 lakh units for the month of May, as demand cools off after three years of blockbuster sales. June isn’t looking bright either.

“What’s being reported is actually conservative. Dealers are actually sitting on 4.5-5 lakh units,” Vinkesh Gulati, chairman (research and academy) at the Federation of Automobile Dealers Associations, told NDTV Profit in a telephone interview on May 30.

The market itself has grown to 3.5 lakh units per month, but more than one lakh units lying in a stockyard is unsustainable.

“If inventory levels were up to 4 lakh, we would have been comfortable. But they are at least one lakh more,” Gulati said. “That’s not good for buyers and dealers alike, as the cost of holding inventory builds up over months.”

Gulati has called for paring of production by original equipment manufacturers to align the demand-supply dynamics. “The monthly output is about 3.85 lakh. Dispatches in May are seen at more than 3.5 lakh. That’ll only clog the pipeline further.”