Hyundai rolls out scheme to rev up petrol car sales

Auto makers too have been a worried lot, wary that the hike will further impact already declining demand for petrol cars due to the price distortion between petrol and diesel. Hyundai Motor India has structured a petrol price lock assurance program to protect its customers from the fuel price hike, reports CNBC-TV18. 

Under the program customers will be offered discounts on the petrol models. The scheme offers to compensate the price hike for vehicle usage for the next seven months. The scheme will be valid on all Hyundai petrol model purchases made till May 31.

Yesterday, top car makers like Maruti and Hyundai, Maruti and Tata Motors had announced a limited period discount on some petrol model.

Below is the edited transcript of Arvind Saxena, director – marketing and sales, Hyundai Motor India interview to CNBC-TV18. Also watch the accompanying video.

Q: Your decision to discount really is that driven by the steep price hike in petrol or is it an attempt at clearing inventories?

A: The discount of Rs 50,000 includes exchange discount which may not be true for all customers. Nearly, 20-25% customers exchange cars and end up getting higher discount.

Anyway, discounts are very high not only for us but for the entire industry. Inventories are a bit higher but they are under control. We are trying our best to improve our retail to keep inventories under control.

Q: What is the current inventory level?

A: Our inventory level could be about 35 days on an average of our sales.

Q: What margins are you willing to live with after this discounts?

A: We still have very low penetration as far as car ownership is concerned. Average person doesn’t use public transport system even today even in most big cities like Delhi or Mumbai. Very few options are left for people other than buying a car.

There would be a constraint in bigger growth that we have seen in the last couple of years but moderate growth of 7-8% considering have low base of overall two million passenger cars last year, We should be able to maintain same growth.

Q: How is price hike and distortion in fuel market impacting your long-term plans? Are you being forced now to consider upping diesel capacity?

A: Our long-term plan is to improve diesel availability which to an extent is constraint for us till March 2012. From April onwards, we have improved our diesel vehicle supplies; we have increased it by 40-45% compared to earlier. Diesel engine availability will be our long-term focus.

Q: By when you plan to set up a new diesel engine plant in India?

A: Another couple of weeks.

Q: What kind of investments will you need to make to set up diesel engine plant?

A: Minimum investment will be Rs 400-Rs500 crore with capacities of 1,50,000 engines or above if we plan to set up a plant.