Hyundai says geopolitical conflict hurt Q2 performance

Hyundai Motor India, the country’s second-largest automaker, has reported declines in its revenue and profit, attributing the poor performance to the sentimental impact of global conflicts.

Net profit fell 15.5% to Rs 1,375 crore from Rs 1,628 crore while revenue fell 7.5% to Rs 17,260 crore from Rs 18,660 crore. The company said conflicts in Ukraine and the Middle East—as well as cyclical industry trends—hurt its performance.

During an investor call, Tarun Garg, Chief Operating Officer of Hyundai Motor India, acknowledged that geopolitical uncertainties have persisted, particularly the protracted conflicts in Russia-Ukraine and the escalating tensions in the Middle East, including the Red Sea crisis. “These conflicts have dampened consumer sentiment,” he explained. However, he noted that demand rebounded during India’s festive season in October, offering a short-term boost to the domestic market.

Hyundai also reported a decline in its average selling price (ASP), with domestic ASP hovering around Rs 7.7 lakh and export ASP at approximately Rs 7.5 lakh in Q2FY25. The management attributed this decrease to the geopolitical headwinds, which, combined with rising logistics costs and currency fluctuations, have impacted overall price realization. "The geopolitical situation did impact the ASP" the management explained. 

Exports form a vital part of Hyundai India’s business strategy, representing a significant share of its overall revenue. The company’s production facility in Chennai serves as an export hub, shipping vehicles to over 85 countries worldwide, including key markets in Latin America, Africa, and the Middle East. This export-focused strategy allows Hyundai India to capitalize on economies of scale and diversify its revenue streams, though it also leaves the automaker more vulnerable to international volatility.

Investments and Future Outlook
Despite these headwinds, Hyundai continues to make substantial capital investments to solidify its position in the market. In the first half of FY25, the company invested around Rs 1,400 crore, with additional capital expenditures planned for the remainder of the year. These investments are aimed at bolstering Hyundai’s EV lineup and advancing digital and manufacturing innovations at its Indian facility.

Looking ahead, Hyundai remains cautiously optimistic. In the mid to long term, the company expects a sustained demand momentum in the industry and claims that it will  continue to focus on quality of growth by maintaining an optimum balance between volume, market share and margins. 

Unsoo Kim, Managing Director, Hyundai Motor India, said, “Despite the sluggish market conditions, we have successfully maintained profitability in H1 FY 2024-25, largely due to our proactive and continuous cost control measures. Further, we will be launching the CRETA EV for the mass market in the coming months and we expect it will be a game changer in the EV market.”. 

Hyundai’s domestic sales volumes dropped by 5.8% year-on-year, with wholesale figures falling to 149,639 units in Q2FY25 from 158,772 units the previous year. Exports, however, were hit even harder. The company’s foreign shipments fell by a substantial 17.1% to 42,300 units, down from 51,005 units in Q2FY24, according to Hyundai’s latest investor presentation.