सिंहदरबार संवाददाता
Kathmandu. It has been 12 years since I joined Laxmi Intercontinental. I have been working in the auto sector for 20 years. I come from a technical background. I am a technical engineer. I did my MBA in Nepal and entered the service sector as a technical person.
Vehicles are a symbol of luxury in Nepal. They also measure progress in Nepali society. In personal life, a vehicle also measures progress. We Nepalis are represented by other things besides the ‘part from mobility solution’ of a vehicle. In that context, it seems like a big responsibility. The main question is how importers should understand this. In Nepal, a consumer’s vehicle is not just a dream, it is also a person’s goal.
A vehicle is connected to the emotions of the family. That emotion also has a great value. Money alone cannot relate to it, but the emotional value is great. If any company is responsible for that value, it depends on the responsibility to fulfill it and on the way the company has given it.
Hyundai is the only brand that has started Lakshmi Intercontinental as an official dealer since 2009. Since then, its value should be given not only to the product but also to the expectations of the customers in each and everything regarding the experience. Whether it is from the product or from the service, it should be given value even after the vehicle is sold.
A vehicle is a companion of a lifetime and a means of mobility. It helps a progressive person in their journey from one destination to another. It should be a medium for consumers with all the main set expectations.
State of the vehicle market in Nepal
The private vehicle market in Nepal is a market of 12 to 14 thousand per year. . Sometimes situational imports are different. The government defines a policy and the import goes up, then sometimes when the taxation is modified, it declines, so it fluctuates. The frequency is high, the average overall industry in Nepal is 12 thousand.
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## The country’s economy indicates the ability of consumers to buy cars. As the economy improves, people’s ability to buy cars also increases. There are many options for Nepali consumers in cars. If you buy an EV car, you can buy it for 2 million and if you buy an ice car, there are cars ranging from 3 million to 70 million.
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## If you look around the world to see which one is more popular according to the segment, cheap cars are used more and expensive cars are used less. But surprisingly, that trend is not followed in Nepal. In our current context, there are more in the middle segment. Economically, it does not directly reflect whether growth is for everyone. Because even with an economic growth rate of only 4 percent, car sales have gone from 7,000 to 14,000. In Nepal, tax policy is making a big difference more than economic growth.
Can a monthly employed person buy a car ?
When talking about EVs, the government had initially arranged a 20 percent down payment. But now that arrangement has been revised to 40 percent. When buying a car worth 30 to 35 lakhs, the customer should think that his money should be more than 50 percent of what he has earned. A person with a monthly salary or income of around 1 lakh can buy a car worth 30 lakhs.
How to choose a car ?
When choosing any company, it is important for customers to understand how the company is working in the country. When looking at the product, there is a lot of confusion. There is a lot of confusion about which product has 2 features and which one has less. If I say my product is good, another says theirs is good. Therefore, technology-wise Nepalis should not hesitate to experiment in one way, that is a consumer habit. Some people may have benefited from that habit. Some people look at it from a business perspective, as Nepalis like to experiment, so if you collect a little information, you can easily choose a good car.
Overall, what you need to understand is that it is important to understand the company that is the importer. What they are evaluating is how long the importer has been in business? What is their set-up vision? What are the people they have hired? Before buying a car, you should evaluate ‘each and every’ person. A Nepali car is an emotion, not just a companion of progress, but also an emotion. That car has to fulfill many things. So what are the remaining services and facilities for bringing that car? It is very important to evaluate things like how I will get service facilities from the problem in the future or its after-sale service, whether the motor parts are available or not.
The product should be selected in that way. If someone understands all that in all ways, there is no better option in their choice than Hyundai. Now if we look at Hyundai in the context, there are 20 service points. We have placed people as per the requirement in our showrooms. Whom we have been grooming ourselves. We have our own trading institute. In which they have been improving themselves and becoming trainers for 12 years. All that is for the consumer. The company is working hard to provide fast convenience to consumers.
What Hyundai itself does is a little different, otherwise you have not seen anyone profitable in the 4-wheeler segment of automobiles in Nepal to date. If there is an advantage in bringing and selling directly, then why did they invest so much in setting up an assembly plant? Investing in bringing that means giving the people here the confidence of a label.
Hyundai has not yet set a target of selling so many vehicles. We have not set a target for selling in the sense that we should take it to the next label. If you look at the structure of any showroom in 2009, it would have been normal. But we have worked hard from the beginning to ensure that a high showroom is needed in a place like Thapathali so that the customer can have a good experience after paying. We have been doing this for 10 years to get that experience. Why we did it is not the region of today.
The development of vehicles in Nepal should be developed differently. This is the ideology. That ideology is the source of customers, local distributors and importers. Even if the vehicle lacks four features, if I choose it with confidence and get a 5-year brand experience after buying that vehicle, I will be logical.
Today, there is a trend in electric vehicles. This is an environment, maybe hydrogen can come tomorrow, maybe fuel cell can come next, maybe it will sell better than that. This should not be finalized as a final decision. Everything should be in the mobility option. What is better in Hyundai is that every product is available from an entry label to the upper journey of the customer and our progressive partnership is always there. In the ice, there is Creta to Palisade as required, while in the EV, Creta EV is coming in 2 variants. If we look at the premium label, there is Kona, Ioniq-5. If we look outside Nepal, there is Ioniq-6, Ioniq-9. ‘Each and every’ Hyundai’s journey can be with Hyundai’s customers, staying inside, their progress and our progress can also be with us. This partnership should be evergreen. This is the mission of our Hyundai company.
We have received love from consumers not only for Creta but also for every product we have introduced. The reason for this love is that we have also been able to meet the expectations of customers. Creta itself is a brand and there have been more than 10,000 Creta owners for the past 5 years. Satisfied with Creta, after the new EV became an option, customers are getting a good response. Now in Nepal, due to some factor and government policy, ‘EV is more attractive’ has become. After the Creta EV came out, many people have complained that it would have been better if this had been introduced earlier, so they would not have had to go to many experimental brands. Many people have bought brands because they are cheaper. In that sense, we have received a very good response from consumers. We are also excited.
Ice and EV
Our experience in EV is limited to a company in Nepal, we are also in it. We brought Ionic in 2018, Kona in 2019, Ionic 5 in 2021. According to the policy of the Nepal government, which requires EV certification percentage, we had the product available when we tested it at the logical National OA. Our product was also in good demand.
It may not be the volume like it is now, but in that sense, we were the only ones who had this experience. Today, there are 150 technicians, out of which 75 percent are EV certified. EV certified technicians are those who know everything about EVs and are 50 percent experts. There are people who have been working since 2018. What this expert can do is that they know ‘each and every’ thing about high voltage batteries, motors and three-phase lines and even small components that need to be changed, there are people who can do micro diagnostics and mechanics who can also diagnose.
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## In that sense, we are ready product-wise and are already ready in infrastructure. There is nothing new to say about making EVs. We had already initiated the AC network, and we will have DC network stations 5 to 10 within this month. This year we will have 25 DC networks. This is battery management, which is how we will do it. We have initiated a different label of passenger on what will happen to the battery in the future.
#EV re–#Sale value
## What is the re-sale value of the vehicle? We have planned in the policy on how we will consume it. The perspective is different when a new one comes and an existing one has been used.
The limitation of EV is made up of 2 components. 50% of the cost of the battery is 50% of the vehicle. 2 parallel things have to be added to the EV. The depreciation of the two is according to our calculations. One is depreciation, if the normal calculation of the vehicle is 10% per year, then let’s put this vehicle in 10% depreciation. No one has an idea of the depreciation of the battery. No one knows how much it will cost, what to do, how much to buy in gas. If I had to buy a 5-year-old EV vehicle, why spend that money if it costs 20-25 lakhs to replace the battery, the consumer who buys a new vehicle would have to psychologically think.
They would consider its value to be zero. The depreciation of the vehicle is in its place at 10/15 percent, now the value of the battery worth 25 lakhs in a 50 lakhs vehicle has become zero. Since it is a residual vehicle, where does it start from, it is significantly lower. We jumped on this new technology, but at that time the government was lagging us in its depreciation part.
Not only EVs are expensive, the parts are also expensive, so its analysis should have been done first. There is an opportunity for EVs in all countries, everyone has adapted in their own way.
Assembly plant with billions of investment
When talking about assembly plants, if we look at the latest scenario, it is very challenging. Logically, it does not seem like that because what people think is that they should come at the rate of parts and parts. There is a different step duty for assembled and unassembled kits. There is a few percent discount from what is currently available. Among the discounts, we have already reduced the price to the customer. Then, there must be stability in every thing that needs to be done to start the operation of the 50 percent factory. If it is not long-term, it will not be progressive. In this way, now is not the time to be very encouraging. But that’s not our vision, ours is totally different, our vision is where we should go 10 years from now. There are challenges for that, but after going to that set, Nepal also has a different label. Due to the development of our people here, the development around us, assembly is not visible from the point of view of today’s business. Because the vehicle itself is subject to 30/40 percent customs duty. Now, how much you bring it and see the rate of Nepal’s logistics here. Bringing batteries to Nepal is a challenge in itself. It has to be brought in a container. There was a fire once while bringing it in a ship, then their guidelines were changed. So the challenge is how to make it easier.
What is behind the Chinese brand
First of all, there is the matter of ideology. There are 2/300 EV pans in China, more than in any Chinese company collecting brands. Its market size is up to 3 million per month. There are 300 of these brands in Nepal, and by combining them into small and large, a variety of 300 has already come. It is challenging to grow in the Chinese market in the long term.
If all these brands come to Nepal, how will they survive? Nepal’s brand is worth 12 thousand. It is difficult to sell such a brand for 15/20 lakhs, but if you divide 12 thousand per year, you will not even get 2/300. How can I give the consumer what I want with a 2/300 car? First of all, how many parts will I keep for that consumer, and how can I make the rest of the system. Those who buy a car by investing 30/40 lakhs have a responsibility towards them, not just that small amount, but that has to be fulfilled, whether it is 30 lakhs or 1 crore. We cannot make commitments, if we cannot make commitments well, the experience will not be good. At that time, there will be business, if it is 250 in terms of business, it is not bad to keep it on the minimum side and sell it for 250, but that will not be good later.
China’s perspective is different, what China sees is business to business. China sells its business to its distributors here, it means that it earns this much and that much. When we do business with Hyundai, they do not say that. They say what they are going to give to the customer, extra. Their thinking is with the Korean counter partners. Hyundai focuses on the consumer, so we also focus on the consumer.
Policy instability
The government’s policy on automobiles is very unstable. All this is due to the up-and-down creation of the market due to the policy. For example, there are more than 20,000 EV vehicles. An ice engine consumes 1,000 liters of oil per month, while EVs save 2.5 billion rupees of oil. Our objective in giving discounts to EVs is our hydroelectricity. The cost of oil is 300 billion rupees, and in Nepal, I save a significant amount of money. The government has worked to reduce imports.
The government has a plan to save 2.5 billion rupees per year. If we calculate it from the government’s point of view, if we consider the revenue from 25,000 vehicles to be around 1.5 million per vehicle, then the government’s money is lost by 30 billion. This is not in terms of consumers. If we look at it from the government’s point of view, we had to suffer a loss of 30 billion to save 2 billion. Even 2 billion will be 15 billion in 7 years, so that much is saved, but today we have lost 30 billion. Another thing is that the government is determining the tax on the peak power (kilowatt) of electric vehicles. This is very unscientific. For example, a fan used in summer usually has a speed number up to 4. But if it is determined that when it is brought to number 1, this customs duty is imposed on number 2, this duty is imposed on number 3, then of course I will exempt that vehicle from customs duty at number 1. Thus, the government has not done it scientifically while determining the tax rate in kilowatts. This is having a huge impact on the state’s revenue.
Overall, this year’s capital expenditure has not even touched 20 percent. This is because we have not been able to meet any expectations from the development budget in these 2 years. Because we have not been able to meet the current expenses. Now what can we do if we only drive good vehicles and the roads are not good? It is necessary to understand why the country needs money. Money is necessary to improve the infrastructure of the country. If we keep its value, which reading is right, it is important to understand how much sacrifice is needed. If nothing new happens in the next 4 years, if new infrastructure is not built, why will FDI come here, why will new people do new businesses and live here? Today’s lead is road infrastructure.
From the consumer point of view, there is a benefit, but what if there is no road after getting a car worth 30 lakhs? The road may be good, but the car should cost 35 lakhs, and the government should pay 5 lakhs, so that the road can be made good. Recently, Nepal has been on the grey list, but its problems are yet to come. The consumer has benefited, everyone has seen the EV business in Nepal, and no matter how much they have taken, it seems like the consumer has lost money.
Finally
Consumers should think about the long term when choosing any brand. Product features are good and bad for everyone. It should be disguised according to the country. If anyone chooses Hyundai, it has not harmed anyone.
(Opinions of Deepak Thapaliya, General Manager of Lakshmi Intercontinental, based on conversation)
प्रतिक्रिया दिनुहोस्