Hyundai India profit falls for second year as competition, costs weigh

Hyundai Motor India Ltd’s (HMIL) yearly profit fell for a second straight year in FY26 after its October 2024 listing, as declining domestic sales amid intense competition and higher costs linked to the West Asia war weighed on performance.

In the process, it ceded its position as the country’s second-largest carmaker, behind Maruti Suzuki India Ltd, to Mahindra & Mahindra Ltd (M&M), a rank it had held since 2009.

The company announced a capital expenditure of ₹7,500 crore for the ongoing fiscal year to expand production capacity and support the launch of new models, as it vowed to regain its number two position quickly.

“We have every intention to come back to the number 2 position…We are very passionate about our position. And we will get it back, sooner than later” Tarun Garg, managing director (MD) and chief executive officer (CEO) at Hyundai India, said at a press conference on Friday.

The Gurugram-based Hyundai saw its consolidated net profit decline 4% to ₹5,432 crore, as margins took a 50-basis-point hit to end the financial year 2026 at 7.6%, according to a company statement. Rising commodity prices and higher discounts due to intense competition with domestic rivals like M&M and Tata Motors Passenger Vehicle Ltd hurt Hyundai's profitability.

The company recorded a 2% growth in annual revenue to ₹70,763 crore, with overall sales rising 1.7% to 775,031 units during the fiscal year ended 31 March 2026. A large part of the growth came from exports, which rose 16% to 190,125 cars during the year even as domestic sales declined by 2.3% to 584,906 units.

For the first time since financial year 2009, Hyundai Motor slipped below the second spot in the domestic car market. Tata Motors Passenger Vehicle also overtook it, relegating the company to fourth place by the end of FY26.

Hyundai’s performance lagged Maruti and Mahindra, which declared their results in the past fortnight. Maruti’s consolidated FY26 revenues rose 20% to ₹1.83 trillion, while net profit inched up 1% to ₹14,679 crore. Mahindra’s revenue surged 26% year-on-year to ₹1.98 trillion in 2025-26, while net profit jumped 32% to ₹18,621 crore. Tata Motors PV is yet to declare its results.

Hyundai's stock settled about 1% higher at ₹1,852.45 on the BSE on Friday.

The Indian arm of the Korean auto major now expects domestic sales to grow 8–10%, aided by last September’s GST cuts and the launch of two new models: one internal combustion engine and one electric vehicle. However, export growth is expected to decelerate to an 8-10% range as West Asia war clouds hover on the industry.

“FY26 marked a year of two distinct phases for the automobile industry, driven by a shift in policy and demand dynamics. The first half remained largely underwhelming, primarily due to muted customer sentiments,” Garg said.

“However, the landscape shifted meaningfully in the second half following the GST rate rationalization in September, which acted as a strong catalyst for recovery,” he added.

While sales recovered in the latter part of the year, a large hit to its profitability came during the January to March quarter of 2026. According to data released by the company, net profit fell 22% year-on-year in the quarter to ₹1,256 crore.

Profit margins fell by more than 2 percentage points to 8.9% during the fourth quarter, hurt by commodity price inflation. Revenue rose 5% to ₹18,916 crore.

Even as the company looks to grow aggressively in the domestic market, it expects some moderation in exports, which account for about a fourth of its total sales.

“As far as the exports are concerned, we have seen a growth of more than 16%. But last quarter, we know the situation, what has happened after the war. So, our exports to Middle East geography have been impacted,” K.S. Hariharan, chief investor relations officer, said.

“We have been looking at a few mitigation plans here. Number one, we have been aggressively focusing on other markets. For example, even in the last quarter, if you see, we increased our shipments to markets like Latin America, Mexico and others,” Hariharan said.

“This has helped us to minimize the impact of this Middle East issue. We are also continuously trying to strengthen our product offerings in the overseas markets,” he added.