Hyundai Motor India has retained its forecast of 8-10% sales growth for the financial year despite posting lower overall volumes in the April-June quarter. The automaker said the supplier-related production disruption has largely been resolved and demand remains strong ahead of the festive season.
The automaker sold 178,082 vehicles in the first quarter of FY27, down 1.3% from 180,399 units a year earlier. Domestic sales rose 5.4% to 139,374 units, but exports fell nearly 20% to 38,708 units.
Managing Director Tarun Garg said the quarter began strongly before production was hit by a fire at one of Hyundai's suppliers in June.
"The first two months of the quarter reflected healthy momentum with cumulative sales in April and May growing by 13% year-on-year, supported by a favourable demand environment and our strategic product actions," Garg said.
"However, the fire incident at one of our supplier facilities temporarily impacted vehicle production in June, constraining our ability to fully meet market demand. As a result, domestic volume growth for the quarter was 5.4% year-on-year, lower than our initial expectations."
Hyundai had earlier said it expected to recover the lost production during the second quarter, but Garg said the recovery has progressed faster than planned.
"I am happy to report that although we had announced that we expected to recover the impacted production within quarter 2, we have already done most of it within July itself," he said.
Hyundai also reaffirmed its profitability outlook for the year despite reporting a sharp decline in first-quarter margins. EBITDA margin fell to 9.3% in the April-June quarter from 13.3% a year earlier.
Garg said the company expects margins to improve as production normalises and plant utilisation increases. "Importantly, we remain confident in delivering EBITDA mark again within our guided range of 11-14% for fiscal 2027 as well," he said.
According to the management, the company lost production of about 13,900 vehicles because of the disruption and that "most of it has already been recovered in July", with the balance to be recovered within the second quarter.
The company blamed weaker exports on the Iran-Israel conflict, which affected shipments to the Middle East, one of its key overseas markets.
"The US-Iran conflict which started towards the end of last fiscal continued to impact our Middle East exports during quarter 1 of fiscal 2027. Further, export volumes were also affected by the temporary production disruption in June," Garg said.
Even so, Hyundai maintained its full-year guidance for both domestic and overseas sales.
"Supported by production normalisation, strong demand momentum, upcoming festive season and our planned product launches, we expect to bounce back strongly in the coming quarters and deliver our stated growth guidance for 8-10% volume growth for Fiscal 2017," Garg said.
The company also expects exports to recover as production normalises and order backlogs are executed.
"Supported by healthy backorders, continued portfolio expansion and our resilient operations, we expect strong recovery in export volumes from this quarter onwards and we remain confident in again delivering our stated full year growth guidance of 8-10%."
Hyundai is counting on new product launches and additional manufacturing capacity to support growth during the remainder of the year.
The company plans to launch a new internal combustion engine mid-size SUV during the festive season, followed later in the year by a dedicated electric vehicle positioned in the Venue segment.
Garg also said Hyundai will begin third-shift operations at its Pune plant from October, advancing its capacity ramp-up plan by nearly two years.
"This development would effectively advance our capacity ramp-up plan by nearly two years because the original plan was for the end of 2028, enabling us to meet growing customer demand and accelerate business growth," he said.
The additional capacity will support both domestic demand and exports, particularly for the new Venue, which Hyundai now plans to ship to about 35 global markets.