Hyundai Motor India Ltd is banking on calibrated price hikes, lower discounts, higher volumes, improved utilisation at its Chennai plant and cost optimisation to restore margins in FY27, after commodity inflation, capacity addition costs and adverse product mix weighed on profitability in the March quarter.

The company, which has guided for EBITDA margins in the range of 11-14 per cent for FY27, said it has already taken multiple pricing actions and will continue to balance volume growth with profitability.

In Q4FY26, Hyundai Motor India’s consolidated EBITDA margin fell to 10.4 per cent, from 14.1 per cent in the year-ago quarter and 11.2 per cent in Q3FY26. EBITDA stood at ₹1,966 crore, down from ₹2,532.7 crore in Q4FY25 and ₹2,018.3 crore in Q3FY26. 

During the analyst call, K S Hariharan, Head of Investor Relations at Hyundai Motor India Ltd said commodity inflation had a sequential margin impact of around 120 basis points in Q4FY26. Of this, around 50-60 basis points was one-off in nature and may not recur in the coming quarters.

The company also faced higher employee cost due to the impact of labour code provisions and actuarial assumptions. Management indicated that employee cost rose by around ₹100 crore sequentially, largely because of these one-off factors.

Hariharan said Hyundai’s Q4 profitability was also affected by costs linked to capacity addition and unfavourable product mix. Though volumes were higher, the cost pressures outweighed the benefit of scale, leading to a year-on-year decline in margins.

On a sequential basis, better volumes, calibrated pricing actions and government incentives helped partly offset the impact of commodities and unfavourable sales mix.

Price Hikes, Discount Discipline

According to Hariharan, Hyundai took a price increase of around 60 basis points in January, followed by a selective price increase for the Venue in March. Another price increase will be taken in May, he added. At the same time, the automaker reduced discounts. Management said discounts came down to 1.9 per cent of average selling price in Q4FY26 from 2.6 per cent in Q3FY26.

This discount discipline, along with price increases, is expected to support profitability in FY27, though the company said pricing will remain calibrated and linked to market conditions.

“Our strategy is we want to take a proper balance between volumes and profitability. So, the price increase also is something we need to look at the overall market condition. Accordingly, we will take a calibrated call,” Hariharan said.

Chennai Plant to Aid Fixed-Cost Absorption

According to Hyundai’s management, higher utilisation at the Chennai plant will be a key margin lever in FY27, with both upcoming launches — an internal combustion engine SUV and a dedicated compact electric SUV — slated to be produced at the facility.

The Chennai plant utilisation had dropped after production of the Venue was shifted to the Pune facility. The company said the two upcoming models will help bring Chennai utilisation back to healthier levels, improving fixed-cost absorption and supporting margins.

“Chennai plant provides us with a great opportunity… because the Venue was shifted, we had this temporary drop in the capacity utilisation. And now with these two models going to Chennai, we will be very good in Chennai,” Tarun Garg, Managing Director and Chief Executive Officer, Hyundai Motor India, said. 

Garg said Pune is also ramping up after taking over Venue production, with monthly output rising from around 8,000 units to about 12,000 units. The company may consider a third shift at Pune if volumes justify it.

For FY27, Hyundai has lined up capital expenditure of around ₹7,500 crore. Around 45-50 per cent of this will go towards upcoming new products, while about 30 per cent will be used for plant-related investments, including Pune Phase-II expansion and upgrades at Chennai.

Volume Growth to Support Margins

Hyundai is targeting 8-10 per cent growth in domestic volumes and 8-10 per cent growth in exports in FY27. The company expects the two new launches to contribute meaningfully to volumes during the year. Garg said the company has started FY27 on a strong note, with April domestic volumes growing 17 per cent year-on-year.

“Backed by product actions and other initiatives, we remain confident of delivering domestic volume growth of 8 to 10% in FY27. Having said that, our enhanced plant capacity and flexible operations position us to swiftly respond to any further growth opportunities, even beyond 8 to 10%, should they arise during the year,” Garg said. 

The company also expects to outpace industry growth and gain market share, helped by fresh product actions and expanded capacity. “We are fairly confident that we will be able to outpace the industry in this fiscal and gain market share,” Garg said.