Export surge, cheaper steel help Hyundai beat India blues, report better profit and margins in Q2

Mumbai: A surge in exports and lower steel prices helped Hyundai Motor India Ltd offset a slump in domestic sales to report better profit and margins for the July-September quarter.

Domestic sales of India’s third-largest carmaker were washed out as consumers delayed purchases after 15 August in anticipation of a goods and services tax cut announced by Prime Minister Narendra Modi. A surge in sales after 22 September, when the new GST rate of 18% became effective on most cars, offset some of the volume impact, but couldn’t fully compensate for the lost sales during the quarter.

Sales remained strong through the festive period in October, the company’s management said after reporting the second quarter earnings. It is bullish on the sales momentum continuing through the rest of the quarter.

“Following the implementation of GST 2.0 reforms, the Indian automobile industry witnessed a strong wave of demand momentum,” Unsoo Kim, managing director at Hyundai Motor India, said in a post-earnings media call.

The positive consumer sentiment and improved affordability led to a “remarkable surge in sales in the last week of the quarter, partially offsetting the muted demand amid postponement of buying by the customers,” he said.

The company expects its upcoming new generation Hyundai Venue–a sub-compact sport utility vehicle that benefits from the revised GST rates–to add to its sales momentum in the domestic market. The car is scheduled to be launched next week.

Export-led performance

During the September quarter, the company reported a profit of ₹1,572 crore, 14% more than a year earlier, led by higher exports, which accrue better margins. Revenues were up too, by just over 1% at ₹17,461 crore.

Domestic car sales during the quarter fell 7% to just under 140,000 units. But a 22% surge in exports to over 51,000 cars helped the company end the quarter with sales of 191,000 units, marginally lower than the previous year.

Hyundai's export margins, on average, tend to be 2-3% superior to domestic sales. An 8% year-on-year lower cost of materials consumed, mostly due to multi-year low steel prices, also helped the company deliver richer margins both sequentially and year-on-year.

Earnings before interest, tax, depreciation and amortization (Ebitda) was 14% higher year-on-year at ₹2,429 crore. Ebitda margin was 110 basis points higher at 13.9%.

“It was a very strong performance. Exports helped offset the impact of lower domestic sales. The margins were better than recent quarters, supported by higher exports and lower raw material costs,” said Mitul Shah, automobile analyst at DAM Capital.

Battle on in India’s car market

Global automakers are betting on India’s car market, the third largest in the world, to scale rapidly as the vast majority of the country still lacks a personal car. On average, India has only seven cars for every 1,000 people compared to 860 in the US and 223 in China, as per Hyundai’s recent investor presentations.

To wrestle market share from rivals, Hyundai has planned to launch 26 car models, including refreshes and model upgrades, over the next five years, Hyundai Motor’s global chief executive Jose Muñoz said earlier this month. The company is targeting a 15% share of India’s total car sales by FY30, up from 14% in FY25. It also wants to win back the title of being the second-largest car seller in India, which it has been losing to Mahindra & Mahindra in the ongoing financial year.

Market leader Maruti Suzuki India Ltd, meanwhile, has lined up eight new sport utility vehicles for India over the next five-six years to regain 50% market share, an achievement that it held for long but lost after FY21, when it stopped selling diesel-powered cars. The company had just over 40% market share in FY25.

Homegrown automakers Tata Motors and Mahindra & Mahindra have been consistently gaining market share in the last five years at the expense of Hyundai and Maruti, and have charted their own product plans to retain their share of the market, if not gain more.