Hyundai falters on domestic front in Q2, car exports pick pace

The Creta was Hyundai's largest-selling car in the domestic market in the September quarter at 51,683 units.

Hyundai Motor India, which saw a decline in domestic volumes in the second quarter of the current fiscal even as exports gathered pace, is looking to leverage the optimism following Goods and Services Tax (GST) rationalisation and the start of its new product cycle with the launch of the second-generation Venue compact SUV.

Hyundai’s domestic volumes fell 7% year-on-year (y-o-y) to 1,39,521 units in Q2 FY26 from 1,49,639 units in Q2 FY25. The Creta-maker trailed rival original equipment manufacturers (OEMs) such as Mahindra & Mahindra (1,45,503 units) and Tata Motors (1,44,319 units) during the quarter.

The company performed better on the export front, with shipments rising 21% y-o-y to 51,400 units in the September quarter from 42,300 units a year ago. Hyundai remains the second-largest car exporter from India after Maruti Suzuki.

"Following the implementation of the GST 2.0 reforms, the Indian automobile industry witnessed a strong wave of demand momentum. This led to a positive shift in consumer sentiments coupled with improved affordability, which translated into a remarkable surge in sales in the last week of the quarter, partially offsetting the muted demand amid the postponement of buying by the customers," said Unsoo Kim, Managing Director, Hyundai Motor India, during the Q2 FY26 earnings conference call.

Before the rollout of the new GST structure on September 22, both wholesale and retail operations were impacted for over a month as companies recalibrated dispatches to dealerships and customers deferred their purchases.

Carmakers, however, witnessed historic sales on September 22, as the first day of the nine-day Navaratri festival coincided with the introduction of the GST 2.0 regime. Maruti delivered nearly 30,000 cars, while Hyundai registered around 11,000 dealer billings and Tata recorded close to 10,000 deliveries.

Under the new GST structure, smaller cars (sub-4 metre models) fall under the 18% slab, while the compensation cess on automobiles has been completely removed. Earlier, these vehicles attracted 28% GST plus a compensation cess of 1% to 3%, resulting in a total tax incidence of 29% to 31%.

Larger and luxury models have been placed in the 40% slab. Under GST 1.0, the total tax on them ranged between 43% and 50% (28% GST plus 15% to 22% cess).

Hyundai is optimistic that measures such as the GST 2.0 reforms, income tax cuts, interest rate reductions, and the upcoming 8th Pay Commission will play a crucial role in bolstering its performance.

"It is overwhelming that these macro tailwinds have come at the most opportune time for Hyundai Motor India, coinciding with our Pune plant expansion and product launch cycle," Kim said.

During the quarter, the company recorded its highest-ever domestic SUV contribution at 71%, while its rural market share peaked at 24%.

Kim noted that Hyundai is witnessing strong demand traction in key export markets, with the Middle East and Africa posting 35% volume growth and Mexico recording 11%. "Going forward, we expect to leverage our new plant capacity and new product launches to sustain this growth momentum," he said.

On the outlook for the remainder of the fiscal, Kim added: "On the domestic front, we aim to keep pace with the industry's growth momentum for the residual part of the year, while our strong export performance is set to surpass targets for FY26."

Hyundai will launch the new Venue on November 4. The importance of this model can be gauged from the fact that it is the company’s second-largest selling car in India after the Creta mid-size SUV.

"We believe it (the new Venue) will be a catalyst in fortifying Hyundai's leadership and expanding our stronghold in the compact SUV segment," Kim observed.

Hyundai has sold over 7,00,000 units of the Venue since its market debut in 2019. The compact SUV segment, where the Venue competes, is the largest in the Indian passenger vehicle (PV) market, with volumes exceeding 10,84,000 units in FY25.

"We are focused on sustaining growth by leveraging GST-driven optimism, executing our product launch plans effectively and strengthening our on-ground efforts to capture emerging opportunities. This synergy is poised to reinforce our competitiveness and accelerate our growth trajectory," Kim said.