 Thanks Mr. Garg for joining us. We have today Mr. Tarun Garg, Director of Sales and Marketing, Hyundai. The context of this conversation is how non-metros are driving the next phase of growth in the country. Unlike what we saw before COVID when urban markets where the drivers of the growth is that the action has shifted to non-metros and we are going to talk about how auto is looking at the sector. We are going to look at where the focus now stays as far as non-metros leading the economic resurgence. So my first question to Mr. Garg is what is the outlook for the auto category post the unlock? I mean unlock is already in its another phase but what is the outlook that you see for the auto industry? Thank you Rohit for having me here and yes the unlock happened and all of us tried to ramp up our supply chain and thankfully the customer response too has been reasonably good. So as you know we all started with zero sales in April and it was better and by June we had reached 98% of last year level and this month looks to be even better than July so we hope to reach the across the last year level in August. So things are only looking better. Now this could be because of the pent up demand because we had almost zero sales in April and May also because so many customers of last year they were waiting for BS6 to really come into force and as you know that April 1, 2020 was the day for BS6 and that was a time when lockdown was in full force in India. So those customers are now coming back and plus as far as Vundey is concerned we also launched some very exciting products whether it was the all-new Crater or the new Verna, the new Tucson and the new Elantra diesel as well. So we are receiving some good traction so far so good. So you mean to say that the demand has come back and has it really is the supply side also gearing up in your view? Yes in fact as sales and marketing people I would say that they have done a tremendous job the production as well as supply chain. We fully understand the concerns and the kind of effort they have to put in so but I'm happy to report that they have really come up with very innovative solutions and in fact if you know that Vundey was the first company to be off the blocks you know when this unlock happened and you know when we produced those 200 vehicles on day one it was a matter of great pride for all of us at Vundey and we have only grown from there and now both the plants are working three shift operations because we are receiving some very good traction for our products whether it is all the new products or even the entry-level products. So it is very important for us that we are able to supply these vehicles to customers and that is where I think both the production and supply chain have been able to really meet the demand and come up with good volumes. Mr. Nagar tell me what are some of the key consumer behaviour changes that have taken place in the category that is coming out of the lockdown and what are some of the permanent and temporary changes in your opinion out of what we are witnessing? Look one thing which is very clear is that customer is looking for personal mobility you know rather than shared mobility because last couple of years you know so many customers had shifted to shared mobility because of the convenience and of course the cost factor but now I believe the hygiene personal hygiene and the sanitization becomes much more important so people are shifting to personal mobility which is actually leading to a demand in new car sales as well as pre-owned car sales it is also leading to opportunities in the subscription sector you know because so many customers you know they say that okay we don't want to own the car but we want a car for our personal usage and that is where today's subscription is coming in very handy. So this is one aspect of it the second aspect of it is because the digital behaviour of the customer is also you know has accelerated of course last couple of years we were seeing the digital inquiries go up but then Hyundai was able to come up with some very unique solutions like click to buy you know where an online purchase can happen on the Hyundai platform and we are seeing a good traction from the customers and we believe that digital is something which is only going to accelerate going forward so that is the second part of it the third part of it is I think customers are also becoming much more discerning and they want brands which can solve problems I'll give an example like in these times customers are looking you know because some of them you know they maybe they have not got their bonuses so they're looking for maybe a unique finance solution where they start with a low EMI and maybe as years go by they are ready to give a higher EMI so what we have to do is along with our partners in banks we have been able to give some step up EMI schemes with the customers or maybe long tenor schemes eight year schemes where the EMI would be low or maybe a balloon scheme where 59 you know for 59 months you give a low EMI and maybe the 60th month will be a high EMI so I think it's all about realizing the problem which the customer has and providing solutions the second part of it is you know when this BS6 happened customers also wanted many customers were waiting for a diesel BS6 because there was a lot of speculation whether manufacturers will be able to do a BS6 in diesel then at what price it will come so as you know that when I was able to really do a BS6 diesel across its modern range whether it is an entry level or you know at 1.2 litre or models like Creta at 1.5 or models like Tucson at 2 litre and there also we have received some very good traction because the delta price change which we were able to bring in a diesel was only 20,000 rupees so I think it's all about solving those problems plus giving the customer some something extra you know when you are giving the car for example we'll launch this Hyundai mobility membership which is again some very unique experience for the customer where he immediately on buying a Hyundai car he gets attached and he gets the advantage of you know some very good offers from 21 brands you know both in the car space as well as in the lifestyle space as well so I think like what I said it is all about giving some solutions to the problems giving something extra giving more value to the customer and I think this is one behaviour which is definitely going to stick to the customer that he wants you know brands which can actually solve problems for him. Right so let me ask you this when you see the various segments of cars that are there you know the various categories tell me is it only for smaller cars that the demand is there also it was predicted earlier that you know based on the china model where smaller cars are preferred for personal safe and mobility is there any particular segment say the smaller smaller car segment that's only seeing the demand how is the demand divided within the category of mobility. I think Rohit here this is a very interesting question and if you would have noticed that you know many industry experts were feeling that post corona the demand probably would be for small small cars and entry-level cars and maybe the customer budgets you know will go down but what we have seen at Hyundai is and actually the industry phenomena that it is the SUVs also which are seeing a very good traction in fact last four five years SUVs were seeing the continuous you know the share of SUVs in the industry was growing and in fact our four years back in only eight to nine percent and now it's as high as 26 percent and Hyundai is at the forefront of the SUV range the new Creta which we launched we already have received you know more than 75,000 bookings we are selling close to 11 and a half to 12,000 vehicles every month the venue continues to be very strong now we have the new song the new song which has again received very good response the Kona EV is also doing very well to those discerning customers who want electric mobility so my point is that yes as long as you are able to give a very good brand a very good product with some good powertrain options some good features like for example when I talk about the venue and the Creta the blue link is something with the customers are really liking then in the Creta the voice enabled panoramic sunroof is something with the customers are liking the air purifier becomes very relevant in these times of you know when customers are really wanting you know purified air so it's all about really providing those options automatic I think more and more people are wanting automatic cars and we as Hyundai have provided five options of automatics to customers in fact you would have seen our recent technology IMT the intelligent manual transmission which we have just introduced in the venue where not only it is a two-pedal technology which means great convenience to the customer at the same time you can have that feeling of control by you know shifting gears as well and at a very nominal price increase so like I said SUVs are seeing a very good traction and of course the entry level cars whether it is the Nios or the Aura or the Santro I think some very good traction out there the pre-owned cars as well so I would say that as long as you are able to provide good value to the customer some good options to the customers definitely they are there to spend money to buy your cars and because it is the need of the hour very clearly customers are wanting to buy cars also I think there is some interesting data that suggests that you know car buying is a discretionary purchase and we are competing probably you know when normally a customer would spend on international travel some domestic holidays maybe when he's going to parties and pubs he's spending on clothes all that all that has reduced dramatically here and but car is something which is okay why not you know there is a car which which defines myself which defines my lifestyle and which also fulfills my mobility needs why not I mean if if a brand is providing me all this I'll go ahead and buy the brand of my choice so I think this is what is happening and across the segments we are seeing some very good traction right so you're somebody who's very close to the market you know the pulse of the market so first of all in your view how are the markets behaving also because what we have read and understood is that it's the non metro markets that are seeing an upsurge in demand far higher than the metro markets how much do you how far do you agree with this statement what is your reading of the market I think I agree with the statement largely and yes and definitely the tier two tier three tier four towns seem to be doing much better than the metros the reasons are also obvious first is of course the the prevalence of corona you know as you can clearly see the you know the daily Mumbai's and Chennai's are the cases of corona much higher than say the tier two tier three towns the second aspect is also you know the rural the dependence on rural and you know the monsoons have been very good both the harvest and the growing has been very good the minimum support price or by the government is extremely attractive the the road network is continuously improving I'm sure that you know all these factors are ailing and fueling the growth in the tier two tier three towns in fact interestingly when we see at the past history of the Indian auto whether it was the Lehman crisis or you know in 2008 9 or you know even the dot-com bust what we have seen is that whenever the economy is under stress and the GDP growth reduces the immediate impact is on the metro towns you know because there are the people are really dependent or whether it is the IT services or whether people are in the you know the stock market financial markets their dependence and also the sentiment plays a very important role because their people are really looking at the business channel the business newspapers and when they read the negative news you know they get they get into a negative mindset on the contrary I think the tier two and tier three towns as long as their income levels are okay the sentiments are positive and they go ahead and buy so I think this is what is being witnessed and in any case when you see any kind of you know analysis or by the consulting companies Indian growth story very clearly revolves around a good growth in the tier two tier three towns also because of the government's push towards smart cities and the road infrastructure I think all these factors are fueling growth so when we look at the industry numbers or mundane numbers very clearly states like Punjab, Haryana, Himachal Pradesh, Rajasthan, Madhya Pradesh, Chattisgarh, Charkhand seem to be doing much better than say Delhi NCR or you know Chennai or Maharashtra where you know the dependence on the economic growth is very high that said I think we cannot deny the fact that car buying to some extent it's ready to the overall economic growth of the country so we have to be very careful we have to see how this you know how soon the economy is able to bounce back what happens on the corona side there's an upswing if the vaccine is on the corner at the same time if the vaccine is delayed and the second wave of corona comes then there's a downside so I think we have to take it month by month and see how the situation evolves but so far yes a good relief in terms of very good support from the non-metro markets in terms of sales and growth though you touched upon the factors that are responsible for it but if I have to ask you to highlight say three to four factors that are driving this growth in non-metals what would that look like I mentioned the first thing is definitely you know the less prevalence of corona and the less effect on the business as such in the non-metals I think that is clearly the first point the second point I have mentioned the rural economy seems to be doing much better than the urban and definitely the non-metals or the nearby rural areas and fuel fuel that kind of growth the third thing is the sentiment like I mentioned here people's dependence on you know those those sectors which are clearly you know whether it is the travel sector or the service sector which really sways too much with the economy I think the dependence in the non-metro towns is less the fourth factor is also the aspirations and the youth you know here the income levels are continuously going up people are becoming more and more aspirational the road infrastructure the improvement the pace of improvement of the road infrastructure is much higher and in fact even if you see even the big you know the cooperates I think the kind of investment which are happening now in the in the tier 2 and tier 3 towns in terms of you know as compared to the past very clearly the it appears that these are going to be the sunrise sectors you know and the sunrise cities of the future so I think all those factors are aiding this growth and we are not complaining we are we are really you know you know doing all possible things to really fuel this you know to be a part of this growth I think the other factor which is also very important is that digital has actually reduced the gap between the metros and the tier 2 tier 3 towns I think this aspect is also very interesting earlier any OEM would have to really physically reach you know all parts of the country to be there but now like I mentioned without click to buy a person in a very remote part of a rural India is almost you know he has the same facility as somebody in the heart of Delhi so because he can go online he can find out about the car he can order the car he can get his financing done online and actually he can get the delivery done at his house as well and in fact you know almost 100 of our rural sales outlets are also now on click to buy so I think even digital like this has it has reduced the gap of reach you know which probably the in earlier times OEMs would you know would find it probably more slightly more challenging to reach the remote parts of the country I think that factor is also aiding this growth right a couple of more questions one is that if you look at the market mix that you had say pre-covid and now how important are non-metals in your entire landscape market mix? Extremely important because you know when we look at when we do planning you know we are looking at all geographies we are looking at various sectors and you know we are looking at okay what are the common common plans of investing what are the corporate plan where is the mining happening you know has been the trend of monsoons how is the per capita GDP statewide and very clearly if you see whether it is the last five years trend CAGR you can clearly see that the trend is towards non-metals really you know growing and like I said one of the very critical factors the road infrastructure I think well we have to give credit to the government that huge work has been done there in terms of the connectivity of you know improving connectivity of these non-metals as well as the rural areas to the mainstream of the country so Vunday is very strong you know in rural area as well we have close to 500 outlets rural sales outlets of course in addition to our 600 outlets in the tier 1, tier 2 and tier 3 towns so it gives us an edge we have been here for 23 years we have a model range you know not only in terms of entry level or sedans or SUVs but also we have seen that sometimes in the non-metals is the diesel which is much more popular because people they are they travel a lot to some metro and they would want a higher mileage for their cars a good fuel efficiency for their cars and it is where diesel comes in I think that's an inadequate advantage which we have in terms of really providing a good value BS6 diesel so as for Vunday's concern I think it really fits very beautifully in our scheme of things and we are doing everything possible to even expand our footprint in the in these non-metals right so tell me what are the challenges and opportunities that lie ahead for the auto sector if we look at what has happened till now and the kind of situation what is your prediction how do you see this look as far as Vunday's concern and auto sector also Indian car penetration is only about 27,000 so we have a long way to go because all the developed markets are in 400 and 500 and 600 here at 27 so we still have a long way to go we have a full faith in the medium term and long term growth of the Indian economy we have a very young population the population is hiring they're looking at growing their income levels are increasing they're looking at new mobility needs they're looking at new solutions so we at Vunday are always looking to provide those solutions like I said whether it is in terms of products new products whether it is in terms of technology you know automatics whether it is in terms of power trains whether it is in terms of the experience whether it is in terms of digital like for example you talked about opportunities you know earlier when people launch a new model you know we will call you know all the journalists in a hall and maybe you know to those 200 journalists will present and some kind of a TV and a digital you know will happen now we had this you know the covid crisis so but we still had to launch our products so we had this event called the new you know the next dimension and where we launched the the new news song we showcased the new verna and of course the krita success story was shared and believe you me we had you know close to 200 million views you know across various channels so my point is that this has really thrown up some new opportunities for us you know because this new age customer is looking at brand which can solve problems and of course which can provide him convenience that is one part of it in terms of challenges like I mentioned we still have to see how corona progresses is there a second wave coming you know and the overall of course the in the short term the economic growth as well because like I mentioned if you see the past 20 years the car growth has been very closely linked with the per capita income so we we are hoping that the economy revives and you know government has taken some big steps and once the economy revives in the short term also I think more sustainable growth can come even you know in the next one year but as far as long term is concerned we are quite optimistic about the growth story of India you know otherwise also and both in terms of automobiles as well. My final question is about with the vaccine still being tested and nowhere in sight definitely for now do you think the year is going to be the year of uncertainty how are you preparing if it prolongs for example what does the year ahead look for you how are you proactively looking at still being you know releasing your models and capturing your markets what is the plan on that front yeah so the important thing here is you know we at auto sector used to always talk about one year plan three years plan five years plan so of course those plans have to be made but what has become most important now is to be much more agile much more flexible much more proactive and look at every month as it goes by I mentioned to you July we reached 98% of last year level August hopefully we will reach more than the last year level September we're looking at again with optimism so we don't want to really look too far ahead in terms of the growth or the sales numbers and we'll be happy to see as as every month by month at the same time as well as new launches or the technologies etc concern like I mentioned it is no doubt in our mind about the long-term growth prospects so those plans are very much intact and as far as there is concern even in 2019 which was a very challenging year we launched four new models the new ones the venue the Elantra petrol and the Kona and even this year we have launched the Aura or the new Krita the Verna that you saw and of course the Elantra diesel as well so I think we have we are not stopping and we will continue to launch new products new technologies and new experiences for the customers because we are quite optimistic about the about the growth story of India. Thank you Mr. Gaurav for sharing these wonderful insights pleasure talking to you thank you for giving us your time. Thank you Rohit for having me here it was a pleasure interacting with you thank you very much