The consolidated net profit of Hyundai Motor India (HMIL) dropped by 22.2 per cent year-on-year (YoY) to Rs 1,255.63 crore in the fourth quarter of 2025-26 (FY26), primarily due to higher commodity costs and growth in volume sales of low-margin sedans and hatchbacks instead of high-margin sport utility vehicles (SUVs).
Elaborating on the “unfavourable volume mix” that affected profitability, HMIL’s Managing Director and Chief Executive Officer Tarun Garg said the company saw growth across segments after the goods and services tax (GST) rationalisation in September 2025, unlike earlier when demand was skewed more towards SUVs.
He said hatchbacks and sedans growing faster negatively impacted margins, though the trend helped improve plant utilisation and overall volumes. Garg, however, said the company does not see this continuing as it was planning to launch two new models — both SUVs — in FY27.
HMIL’s hatchback sales in the fourth quarter increased by 26.4 per cent YoY to 35,474 units. Its sedan sales jumped by 25.8 per cent YoY to 24,290 units. Its SUV sales, meanwhile, remained flat at about 106,814 units in the fourth quarter.
HMIL also pointed to rising commodity costs as a major pressure point during the fourth quarter. KS Hariharan, head of investor relations at HMIL, said commodity inflation had a 120-basis-point impact on margins sequentially in the fourth quarter, though 50-60 basis points of this was a one-off impact that may not recur in coming quarters. A basis point is one-hundredth of a percentage point.
Hariharan added that Hyundai has been trying to offset inflation through localisation, value engineering, and calibrated price increases.
Garg said the company remained committed to its 11-14 per cent margin guidance for FY27 despite commodity price volatility.
On the impact of the West Asia conflict, the company said exports to the region were affected in the fourth quarter, though it managed to reduce the hit by increasing shipments to markets such as Latin America and Mexico.
Garg said the company still recorded 17 per cent domestic sales growth in April despite the West Asia conflict and added that demand remained strong across markets.
According to Hyundai, the conflict has created uncertainty around supply chains, fuel prices, and customer sentiment, but the company continues to see healthy export backorders and expects volumes to recover once the geopolitical situation stabilises.
Garg said Hyundai plans to introduce two completely new vehicle nameplates in FY27, including a localised electric vehicle (EV) in the compact SUV segment and another internal combustion engine (ICE) SUV in the mid-sized SUV category. He said both products are positioned in high-volume segments and are expected to “meaningfully boost” volumes. Hyundai also plans to evaluate exports of these new models in future.
The company guided for 8-10 per cent domestic volume growth and a similar increase in exports in FY27. Garg said higher volumes, better utilisation at the Chennai plant, and ongoing cost optimisation efforts should support profitability and help Hyundai maintain its margin guidance. He added that the company was prepared to tap opportunities beyond the guided growth range if market conditions remain supportive.
Hyundai has earmarked around Rs 7,500 crore as capital expenditure (capex) for FY27, its highest annual investment in recent years. Hariharan said around 45-50 per cent of this capex in FY27 will go towards the two new products, while nearly 30 per cent will be spent on plant-related investments, including the Pune expansion project and upgrades at the Chennai facility.
On expansion, Garg said Hyundai will undertake an additional capacity expansion of 70,000 units at its Pune plant after completion of the phase-two expansion in 2028. This will take the Pune plant’s capacity to around 320,000 units and Hyundai’s total India manufacturing capacity to more than 1.1 million units by 2030. The company is also evaluating ways to increase production at Pune further, including the possibility of a third shift in future.
“Growth does not come in one day,” Garg said, attributing Hyundai’s recent performance to a multi-year strategy involving rural expansion, higher CNG penetration, disciplined discounting, dealer improvement initiatives, product refreshes, and marketing partnerships such as the ICC cricket sponsorship. He said the company’s existing models were now growing steadily and upcoming launches would further strengthen Hyundai’s momentum in India.
