Hyundai Motor Company

Ladies and gentlemen, good day and welcome to the Q2 and H1 FY26 earnings conference call of Hyundai Motor India Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. I now hand the conference over to Mr. Nishit Jalan from Axis Capital. Thank you and over to you.

Thank you.

Good evening everyone and welcome you all to Q2 and H1 earnings. FY26 earnings conference call of Hyundai Motor India Ltd. From the management team, today we have with us Mr. Unsu Keen, Managing Director, Mr. Tarun Garg, Chief Operating Officer, Mr. Vangdu Hur, Chief Financial Officer, Mr. Gopala Krishnan CS, Chief Manufacturing Officer, Mr. Sarvanan P, Function Head, Finance, and Mr. K.S. Hariharan, Head of Investor Relations from Hyundai Motor India Ltd. Before we start, I would like to inform you that the call is being recorded and the audio call and transcript will be available at the company's website. I would now like to invite Mr. K.S. Hariharan, Head of Investor Relations, to start the call.

Over to you, Mr. Hari.

Thank you, Nishit. Good evening, everyone. Welcome to the Q2 and H1 Financial Year 26 earnings call. Before we begin, I want to remind you of the safe hours. we may be making some forward-looking statements that are to be understood in conjunction with the uncertainties and the risks that the company faces. The conference call will begin with our MD remarks on the performance and outlook, followed by a brief presentation by me on Q2 performance, after which we will be happy to receive your questions. Now, I hand over to our MD. Over to you, sir.

Thank you, Hari. Good evening everyone. Welcome to the second quarter earnings conference call for the financial year 2026. At the outset, I would like to express my sincere gratitude to everyone for showing great interest in HMIL's first-ever investor day. We successfully concluded our investor day showcasing strategic roadmap till 2030. Our global CEO's participation reinforced H&C's unwavering confidence in India's potential and H&I's contribution to the group's global ambition. In the words of our global CEO, India is not just important to Hyundai's global strategy, India is Hyundai's global strategy. GST 2.0 marks a transformative milestone and brings renewed wave of optimism, one that fuels growth, enhances ease of doing business, and strengthens consumer confidence. It is a reform that sets the tone for sustained industry momentum. including empowering millions of customers by making customer mobility more affordable and accessible. Following the implementation of GST reforms, the Indian automotive industry witnessed a strong wave of demand momentum. This led to a positive shift in customer sentiment coupled with improved affordability. which translated into remarkable surge in sales in the last week of the quarter, partially offsetting the muted demand amid postponement of buying by the customers. It is overwhelming that these macro tailwinds have come at a most opportune time for HMIL. coinciding with our Pune plant expansion and the product launch cycle, which will further reinforce our commitment to accelerate. Talking about the domestic sales performance during the quarter, sales volume improved sequentially by nearly 6%, propelled by GSD reforms and a vibrant festival boost. During the quarter, HMIL markets of domestic SUV sales penetration at 71%, highest ever since inception. Rural market continues to be one of the key pillars of our domestic rural society. Our focused efforts in terms of channel extension and the deeper market penetration along with the target of the marketing initiatives are yielding positive outcomes, with rural sales contribution further inched up during the quarter, reaching a record high of nearly 24%. Exports continue its robust momentum during the quarter, with nearly 22% growth on year-on-year basis. We are witnessing strong demand attraction in our key export markets with Middle East, Africa recording a remarkable volume growth of 35% and Mexico recorded a growth of 11%. Going forward, we expect to leverage our new plant capacity and new product launches to sustain this growth momentum. HMIL remains committed to advancing the vision of making India and driving inclusive growth across the mobility ecosystem. We will continue to benefit from the synchronized growth of domestic and export markets, fueling our two-pronged growth strategy. Coming to the margins, we deliver yet another quarter of a strong editor margin performance at 13.9%, with favorable product and export needs, along with a cost optimization efforts. With the commencement of vehicle production operations in the Pune plan from this month, the incremental cost impact may weigh on profitability in near terms. However, we are confident that we will minimize the above impact and secure healthy margins through better operating efficiency and cost control measures. On domestic front, we aim to keep pace with the industry growth and momentum. for the residual part of this year, while our strong export performance is set to surpass targets for FY2026. We are gearing ourselves for the much-awaited launch of the all-new Hyundai Venue on 4th November. The new Venue truly embodies our vision of a Tech Club Go Beyond, offering a driving experience that is both dynamic and deeply connected to our customers' evolving lifestyles. We believe it will be a catalyst in fortifying Zendesk's leadership and expanding our stronghold in the company's SUV segment. To conclude, we are focused on the staying growth by leveraging GST Dream and Optimism executing our product launch plan effectively and strengthening our on-ground efforts to capture emerging opportunities. This synergy is poised to reinforce our competitiveness and accelerate our growth trajectory. Thank you so much. Now I hand over to Hari again.

Thank you, sir. Let me now explain about our business and financial performance. First of all, we are truly excited about the upcoming launch of the all-new venue on 4th of November. We are confident that with an upgraded design, cutting-edge features and class-leading safety, the all-new venue will redefine customer convenience and set new benchmarks in the compact SEG segment. Talking about business highlights, we continue to carry out product interventions across segments and models. So far, in 1st of the financial year 2016, we have executed 20 plus interventions. This strategy helps us in maintaining market competitiveness, aligning with evolving consumer preferences. Our SUV portfolio now contributes to more than 70% in volumes this quarter. The demand for SUVs continues to be robust, particularly in the wake of GST reforms. This reform unlocks growth opportunities for Hyundai, especially in entry and subcompact SUVs like Xter and Venue which offer perfect balance of aspirations and affordability. As already highlighted by RMD, rural sales continues to grow for HMI and we have achieved highest ever rural penetration of 23.6% during the quarter. During the quarter, we concluded the wage settlement agreement with the recognized union for the period 2024-27. It sets a new benchmark in the automotive industry and reflects our shared commitment to fostering a progressive workplace culture that prioritizes employee welfare and supports long-term organizational growth. We are also happy to share that, in line with our commitment, we commence vehicle production operations at our Pune plant from 1st of October, a strategic step to support our future growth plan. Moving on to sales performance for the quarter, we achieved total sales of 1,90,921 vehicles in Q2 FY26 as compared to 1,91,939 vehicles in the same period last year. In the domestic market, we sold 1,39,521 vehicles as compared to 1,49,639 vehicles in the same quarter last year. exports played a key role in sustaining overall volumes during the quarter. Our exports grew by 21.5% year-on-year, driven by strong demand in emerging markets. The consistent upward trajectory in our export volumes reflects the global competitiveness of our product portfolio and underscores HMI's strategic importance as HMC's global manufacturing hub, a shining example of making India made for the world. On a sequential basis, we saw growth in both domestic and export markets during the quarter, reflecting our dual-engine growth strategy. Moving on to volume mix for the quarter, both urban and rural markets continue to witness strong traction in ECB volumes. Hashtag reported decline, whereas sedan volumes increased marginally on a year-on-year basis. Coming to the fuel mix, we observed strong traction in both diesel and P&G powertrains. Diesel accounts for 23% of our volumes, while P&G contributes 15% during the quarter. Now coming to the financial highlights for the quarter. Our revenue from operations stood at Rs. 174,608 million in Q2 financial year 26 as against Rs. 172,604 million in Q2 of previous year. EBITDA for the quarter stood at Rs. 24,289 million as compared to Rs. 22,053 million in Q2 financial year 25. We were able to deliver strong EBITDA margins at 13.9% as compared to 12.8% in Q2 financial year 25. EBIT stood at Rs. 19,114 million in Q2 of financial year 26 as against Rs. 16,868 million in Q2 last year. EBIT margins was at 10.9% as compared to 9.8% in the same quarter last year. Tax for the quarter was Rs. 15,723 million as against Rs. 13,755 million in Q2 of financial year 25. We delivered a strong tax margin of 8.9% as against 7.9% in Q2 of last financial year.

This reflects our continued focus on operational efficiency and margin enhancement.

Talking about the drivers of margins, on a year-on-year basis, the improved margins are attributed to favorable product and export mix coupled with cost reduction efforts. On sequential basis, the key margin drivers were better volumes and product mix amongst others. This concludes my presentation. Thank you all for your time and attention. Now, we open the floor for Q&A. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hand tips while asking a question. Please note that management might use English-Korean translation for better communication. Hence, there could be a slight delay in the responses. Please note the management line will be on mute mode till then. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We will take our first question from the line of Chandramouli Muthaya from Goldman Sachs. Please go ahead.

Hi, good evening and thank you for taking my questions. My first question is just on the festive season. Just want to understand what growth Hyundai would have registered in wholesale and retail terms to the festive season and how you are thinking about potential momentum post festive season on the balance of a fiscal year.

So, thank you for the question.

If you see the festive season, we count the festive season from 1st Navratri to Diwali. It was 22nd September to say 23rd October which was the end of Bhaidoos. So, retails actually grew by 23%. When we do a deep dive into which segments, hatch segments grew by 16%, sedans grew by 47%, SUVs grew by 21%. More importantly, extra plus venue grew by 28%. So, in the festive season, we are very clearly saw that extra and venue grew. At the same time, as you know, venue was seeing this transformation from old to new. So, we had some limitation in terms of the old venue stock. So, we lost out on that. But very clearly, the festive and the GST is giving a big impetus to the venue and extra segment and the 4th November launch of venue should help. The other way to look at it is how does September plus October retail compared to January to August? When we see that the growth was about 20 percent, hatch is 23, sedan 11, SUV is 21 and extra plus venue again 31 percent. So, a very strong growth you know registered in the festive season as well as in the September and October versus January to August.

Thank you. Yes, yes.

I just have one follow-up question on the product pipeline that you had shared with us on the investor day. It was very useful. Just want to understand how you're thinking about rough timing of the MPE, the offloader, and the localized electric compact SUV. If you could give us some sense on rough timing when you potentially plan to bring those products to customers. Thank you.

I think we shared a lot of stuff on the investor day. So my request is, I mean, let's stick to that. But the third question was answered by Jose. The EV, we mentioned the 27th. So calendar 27, we mentioned the EV will be launched. I think let's stick to that because we have already shared a lot of information on the investor day.

We don't have anything further to add on that. Thank you.

Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, can you restrict your questions to two at a time? You may join back the queue for follow-up questions. Next question is from the line of Kapil Singh from Nomura. Please go ahead.

Good evening, sir. Congratulations on a strong performance in what I think was a very tough quarter. Firstly, sir, on the margins, you know, we are pretty close to our upper end of the margin guidance. and I just want to understand what are the reasons that management has been conservative in giving margin guidance for the future because you know capacity will grow from here and are there company specific factors or these are like industry specific factors because of which you know you think which will affect the entire industry because of which you are conservative on margin outlook. And if you could also give a breakdown in terms of commodity costs and discounts for the quarter, what was the impact?

Thanks, Kapil.

Kapil, if you look at on the margin front, of course, this quarter, once again, we have delivered a strong performance. But we need to understand that when we get into the phony phase of the production we have already started, obviously, we are looking at some incremental costs, especially in terms of depreciation, labor costs and factory overheads. So, these elements will have some pressure on the margins for some time in initial period. but as we move forward we are expecting to ramp up you know our production and the sales volumes we have already indicated we are also looking at export as a very good opportunity in the future so all these things you know should definitely support us to secure healthy margins going forward so that is one second thing on the commodity as you asked commodity we had some pressure in some of the items during the last quarter However, what we were able to do, see we have been doing this cost optimization efforts through our localization and other value engineering activities. So, these efforts have helped us to keep the material cost under check during the last quarter. Going forward still we expect some pressure may be there in some of the commodities, but again the point is that as we are continuously working on other mitigation efforts for cost optimization, we believe that we will be able to manage the situation. On the discount part, see, sequentially if you look at, we are seeing some moderation in the discount, especially if you see domestic. Our discount during the last quarter was 3.2% of AST. This is despite the market condition, as you already know, the industry has been, you know, giving further price cuts over and above the GST cut. We were able to follow a disciplined approach on the discounting side.

I hope I have answered all the questions.

Yeah, thanks, sir. And the second question is now when we look at the market share outlook going ahead for the company because, you know, we have seen some latent market share at least in the Vahan data. Can you just talk about what are the factors that have affected, is it the model changeovers or any other supply constraints you are facing? And when we look at the second part of the year or even going forward, how do you think about your market share? Kapil yes thank you for the question and as you know and as I mentioned we are the venue is the second highest volume browser for us and obviously on the retail front we were constrained by the availability of venue because the launch is on 4th November and the details will happen post that so obviously we had a little bit of a gap there as you saw in the investor day very clearly you know the new 26 model pipeline starts from the venue you know so we believe very strongly that this is the time when we will start kind of you know not losing market share so November onward we expect to really grow with the industry going forward and aided not only by the by the model cycle but also of course you know the interventions which we are going to make in terms of even local interventions, you know. So, you will see that even in this, in the last six months, we made some 20 odd interventions. So, we will continue to make those interventions. Rural is going strong. So, I think there are enough headwinds, enough tailwinds for us to now come back on the growth path. At the same time, what you must appreciate is that even in the not so good model cycle, we were able to limit our discounts. We did not join the price war. You saw that GST, pre-GST, there were OEMs kind of who offered the customers The post GST price, we refrain from doing that. Post GST, some OEMs cut the price over and above the GST cut. We refrain from doing that. So, right from the IPO time, we have maintained that we believe in quality of sales. We believe in the balance between volume and profit. We believe in the balance between domestic and export. And I think all that is reflected in our margins and our results, you know, since then. So, I think the approach will remain the same. And to answer your specific question, the new venue should help us to get back into the growth phase starting November. Thank you. Thank you, sir. Look forward to the launch and best wishes. Thank you. Thank you.

Next question is from the line of Amin Pirani from JPMorgan. Please go ahead.

Yes, hi. Thanks for the opportunity.

My question was on the continuous improvement that we have seen in your material cost. And you have talked about, you know, localization in the past. But are there any specific things that you can help us to understand as to how are you able to drive this, you know, gross margin improvement? And how should we think about the reductions and the cost savings in material costs going forward as to how much more is, you know, should we expect, you know, in the coming, say, one or two years?

So, I mean yes as you rightly mentioned material is something clearly we have we have done lot of activities. In fact, if you look at during this quarter on basis point like we have seen a 110 basis points improvement on the profitability mainly supported by material cost reduction. What we are doing is that one is the localization. Of course, as you know last time also we had indicated last year the localization level was somewhere around 78%. Today we stand at somewhere around 82%. So that is one. Second thing is that it is not only tier 1 level, even we are also looking at tier 2 level as a potential opportunity for improving the localization. So this is one. Apart from localization, we also do lot of value engineering activities at the plant operations. That also helps us to take care of some of the cost reduction, you know, activities. So, localization is one, second is value engineering. These two are some of the major drivers for us in terms of controlling the material cost.

Yeah, adding to that while we localizing the parts which give you leverage for the processing cost reduction. During localization, we do a very strong focus on value engineering. So, during the process of localization, we do a process audit, we thoroughly study the processes and we do process optimization. and we try to implement the best practices across the plant global plants and also from our mother plant which improve the overall yield and also gives an opportunity for us to demand a better price from the vendors and this value engineering is a continuous process I can give a few examples. So, how can you optimize the route optimization or how can you optimize the packing? Do you have a simulation tool by which you can improve the packing? So, two examples, one is the route optimization or packing improvement with simulations. So, these kinds of continuous value engineering activities gives us an leverage to reduce the mechanical cost.

that's very helpful. So, just to follow up on that, your localization is currently 82%, like you mentioned. I mean, say over the next, you know, four to eight quarters, theoretically, I mean, is it possible for you to reach 85 or even higher level? You know, just want to get a sense as to how much of localization is possible. And just, you know, another question and, you know, after that, I'll come back in the queue.

If you can also highlight what was the royalty number for the quarter. Thank you.

Yeah, so with the song dedicated location team, we are co-working with all our stakeholders including the HMC headquarters and HMI R&D. So, our aim is to reach 90 percent by 2030. Our focus is on high technology parts. So, like for example, the electrical instruments, hardware, premium car parts and electronic parts. And going forward, we will also looking for deep localization theory.

I mean on the question of royalty, during the quarter, royalty was 2.8 percent.

2.8%. Okay. Thank you. Thank you. We'll take our next question from the line of Arvind Sharma from Citi. Please go ahead. Hi, good evening, sir. Thank you for taking my question.

My first question would be your view on the recent issue around Nextedia. Is it something that you are seeing as a possible impediment to growth or disruption.

That will be the first question. Yeah, thank you so much for the question.

If you look at the Nixpedia, the e-component issue, it is an industry-wide issue, right, so there is no doubt. As far as HTML is concerned, what we are doing is we are constantly monitoring the inventory situation. We are also closely working with our vendor partners to mitigate this impact so that we can have uninterrupted production of the plant operations.

Right.

So, Haitha, is there something that could impact near term or it is not yet a concern as of now?

As of now, we are not facing much challenges because we have some inventory for near term. But this will be a continuous process for us to review and align our counter measures so that we can have seamless production of the operation.

Sure, thanks. Second question would be on the export part. You had given a guidance in last quarter. Given where the export trends have been in the first half, what will be the guidance for the full year if you could share, FY26?

Yeah, so of course, exports have been quite strong for us in the recent times.

So Q2 as we indicated, we have grown by 22% nearly on the export side. The momentum has grown. In fact, we have seen very strong demand for our products across regions. In fact, as our India also indicated in the opening remarks, Middle East and Africa, we have seen growth of 35%. Mexico again grown by 11%. This momentum should continue for us in the near term. though it is difficult to give specific volume guidance but what we believe is that by the end of this financial year we will be in a position to exceed the guidance we had originally indicated during the beginning of the year.

Got it sir. So, while not giving exact number but the 7 to 8 percent guidance that Yeah, so we indicated 7 to 8% original, if you remember. So we expect that we will be in a position to exit that number. The present participant line is disconnected.

We will move on to the next question from Vinay from Morgan Stanley.

Please go ahead. Hi team, congratulations for good set of earnings. I have two questions both for the second half. Firstly, it's good to see discount trending down. Is that how do you expect that trend to play out for the domestic market into the December quarter? Because you do have a new product along. So ideally, where to assume that the discount trend should continue is downward trajectory?

So, Vinay, look, we have maintained that we believe in quality of sales.

There are definite tailwinds in terms of the industry tailwinds, especially the GST. Of course, there are headwinds for the industry. I mean, I don't want to repeat, you would know better than me. We believe that we should be able to, I mean, this is probably the maximum discount level. I mean, this is what I can tell you. The new venue is being launched on the 4th of November, which should help us to reduce discount. At the same time, we will need to be very watchful going forward how the industry landscape is panning out and how we are able to have a good balance between volume and profit. But yes, it seems that the discounts for us have peaked out. Yeah, thank you.

No, no, I think that's fair. That's a good comment. Secondly, in the opening remark, we talked about the incremental impact of the new plant. How long or how many quarters do you expect the plant to last? By when do you see what sort of a capacity utilization rate in the new plant you need to reach that the margin trajectory does not have a drag on margins?

Vinay, if you look at, yes, of course, we have started our vehicle production from this month, October. We are looking at the major incremental costs would come from three elements. One is depreciation, labor and overheads. What we expect is that around 20 to 25 percent there should be increase in the cost of these elements as compared to the level we are currently having in Chennai plant. So, these cost elements of course, will have some pressure as I will be indicated for some time. Because we are again bringing the venue model from this plan, we are pretty confident that we should be in a position to recover our volumes as far as venue is concerned. Plus also, we will be focusing strongly on the export markets as well. So, though it is difficult to give a guidance specifically about the timelines, but generally we expect that we will be able to maintain healthy margins after once these things are streamlined.

Great, great. And lastly, just one question on the CAFE norm, the CAFE 3, any update you are getting from the government? When do we expect the final notification on that?

This question is with SIM. So, we are still awaiting the final notification on the CAFE 3. Okay, great. Thank you.

Thank you. We take our next question from the line of Gunjan Prithyani from Bank of America. Please go ahead. Hi, thanks for taking my questions. This first question is clarification on the comment that you made on the constrained availability of venue. Can you share where the channel inventory is right now for you guys? And the numbers that you shared on the festive sales, I assume those were for, you know, for Hyundai. Is there a number that you can share for the industry as well? Because these numbers somehow don't, are not similar to what we see on Vahan. So maybe if you could just help us explain, is there an element which is not being captured on Vahan registrations?

Look, you have to understand that. Sorry, I'll just wait. So, you have to just understand that because 15th August to 22nd September, you know, nobody could wholesale, nobody could retail. So, everything got piled up. So, normally there is not so much of a difference between Vahan and retail and wholesale. But because of, you know, all this piling up, what happened was there's a logistic challenge, there's a capacity challenge, retail challenge. So, my point is that you need to be slightly patient. I believe that this lag between Vahan and retail will continue for probably one more month and only at the end of November we will know that you know what was the actual situation. So, this is a very unique situation where for 37 days basically customers postponed the purchase and then everybody wanted a car you know suddenly. So, this is one. The second is on the venue, we are more or less done with the old venue stock. So, hardly we have any vehicles, you know, few hundred vehicles in the factory and a couple of thousand vehicles in the network. But of course, because of that, what happened was the old venue stock was not available at many dealerships and that is why we probably lost out on the opportunity. But we believe this is a short-term thing for long-term gain because the new venue is coming in full force on the 4th of November and I am sure you would have seen the pictures and all. The initial response we are getting is very, very good. And on the 4th of November, stay tuned because we will be sharing a lot of things including the price and the features and the bookings we see, etc. Thank you. I hope I answered your question.

So, this is clear. I think just the overall channel inventory would have also run low, I am assuming, given that, you know, there was this sudden surge in logistics constraints, as you mentioned. So, at an overall level, is it fair to assume that we are very, very low on the stock for the rest of the models?

Yes. So, if you see the inventory, if you see last six months, the channel inventory was about, say, five weeks. Now, we are running at about 3, 3.5 weeks of channel inventory including transit. So, yes, the channel inventory has come down, but this is very normal. I mean, after every festival, the channel inventory comes down. Before every festival, the channel inventory is high. So, I do not read too much into it, but it is always healthy when the channel inventory comes down, which means there is hunger in the system to take more. Thank you.

Okay, got it. And the second question is on the plant, the new plant, I think very similar to what Vinay asked. When you, you know, it's now commissioned, if we were to think about the ramp up, and I'm not really looking for a timeline as to when the ramp up happens, just trying to understand the thought process that a completely new model is still some time away. How do you think, you know, the ramp up of the new plant happens? Is it going to be Some of the models, let's say, for example, a new venue or an extra, which is not right now to its full potential. We start sort of manufacturing it in the new plant and we expect to step up in the world with the existing models. And, you know, maybe exports, you know, which you've spoken about earlier. Any thoughts on how this whole new plant ramp up happens? What are these sort of models or trends? the transitioning of existing models or maybe, you know, exploring new markets for exports. What is it going to happen in the next six, nine months? Can we have a completely new model in the portfolio?

Look, it's a very difficult question to answer. I can give you a very general answer that It is about a short-term gain for a long-term gain. Please understand a new plant has come in. Obviously, it's a very natural phenomena for some kind of a time gap. So, my request to you is be patient. I think what we have demonstrated in the past is our ability to really make innovations. For example, last one year was very tough for us in the domestic market. We were able to step up on the exports. For example, last year was very tough in terms of price cuts and discounts. We refrained from that temptation to buy market share or buy volume at that cost. I think we will make all kinds of efforts to increase exports, to increase the existing models, to increase the venue, you know, sales and increase the all model sales also. So, I think, I know this is a general answer, but I think we have seen enough on this. and you have to also appreciate that beyond this it is very difficult to give you very specifics on how the specific margins will be affected or how the specific capacity utilization for the plants will happen the next six to nine months but we will continue to make all all the efforts to improve it at the fastest possible pace thank you all right thank you so much thank you

Ladies and gentlemen, we request you to restrict to two questions at a time, please. Next question is from the line of Vipul Agarwal from HSBC. Please go ahead.

Hi, sir. Thank you for taking my question. Sir, my first question is on the change in the customer service.

I am sorry to interrupt, Vipul. Your volume is very low.

Can you hear me now? Is it better?

Yes, better. Please go ahead.

Thank you. Thank you for taking my question. Sir, may I request you to comment on anything in customer behavior post GST cut like any sense on improvement in share of first time buyers or variant upgrades by customers post GST cut and what will be the share of first time buyers for Hyundai?

So, if you see yesterday I think there is an independent survey which was conducted by news agency PTI

80% of the car buyers post GST survey said that they used the tax relief to switch to a better model, brand or premium add-ons during the festive season post GST 2.0 implementation. The report also suggests that SUVs remain the most popular choice amongst the buyers. Also, more than 60% of buyers plan to upgrade to higher variants within the same brand And 46% have already shifted from ASVS to SUVs. This is an independent third-party report. I already shared that for Hyundai, very clearly Venue and Extra look to be the maximum gainers from this GST shift. But if you talk about first-time buyers, I think it's too early. It's only 37 days. I think we do this survey often every one month. So, you have to wait for it. But generally, the first-time buyers for Hyundai have increased from 29% 5 years back to about 40% now. So, we continue to see a great traction for the first-time buyers, which is very good because if you see from an ASP perspective, it is going up for Hyundai. From a SUVization perspective, it is going up for Hyundai. So, still we are able to attract the first-time buyers, which means Our value proposition is really, you know, is very strong affinity to the young and trendy modern buyers and we believe the new venue will further add to this kind of a momentum. So, as of now, I think this is what I can share with you and I hope I have answered your question. Thank you. Yeah, that was helpful, sir. So, my second question is on like what is the trend between the three categories, compact UV, UV1 and UV2 category, like between venue next category, greater category and Mahindra Scorpio 700 category. post GST cut like do you think now UV compatibility category and the large UV2 category will grow faster than the K5 category because of the GST changes any friend you are seeing over there

So, there is no data. I mean, how do I know?

Because the data will be shared after 10th of November, you know. So, I think let's be patient. Broadly, for us, if I see September plus October projected numbers, SUVs have grown by 21%, sedans have grown by 11%, hatches have grown by 23%, and within SUVs, extra plus venue have grown by 15%. 31%. We are seeing a strong traction for the Crater also. So, as of now it appears that it will be the compact SUVs like Venue which will see a maximum growth but other SUVs will also are also seeing a strong traction. But I think we need to be more patient not only for October numbers I think at least let us see 2 to 3 months to see the real customer pulse on how each segment is behaving post the GST cut. Thank you.

Thank you. Thank you.

Thank you. Next question is from the line of Ragunandan N.L. from Nuwama Research. Please go ahead.

Thank you, sir. Congratulations on strong margin performance and festival greetings. Sir, my first question is, There is an increase in other operating income by 31% QOQ to 305 crores. Can you indicate if it includes any government incentives and will it continue going forward?

Yes, Raghu.

So, if you look at sequential basis, the increase is mainly due to the two reasons in fact. One is again we have seen sequential growth in export volumes. So, that gives us a better duty drawback and other export incentives. Second thing is the common area incentives. So, you know that right the MOE incentive normally occurs for us from the mid of August or end of August like that. So, that is also another reason for the increase in this other operating revenue. Going forward, of course, the incentive will continue, seminar incentive. We also, you know, we will be accruing the Maharashtra incentive also from the month of October.

Thank you. Thank you, Hari, for that. My second question is on hybrid. Considering that there are no significant subsidy benefits like what ERIE has, How do you ensure that the cost of ownership for hybrids will match with IPEs? And if you can give some color, then is the first launch expected?

So, like we mentioned, in the investor day, our global CEO mentioned a very strong plan and the might of the Hyundai Motor Group in terms of supporting the HMI. So, our plan is not limited to one powertrain. You saw a very healthy EV. He mentioned five EVs, a lot of hybrids, a lot of CNGs. So, I think we believe India is a very big country going forward. We have opportunities in all power trains. Globally, if you see, EVs are also doing well, but hybrids have seen a very strong growth. So, I think our timing for hybrids has been planned in a way where we believe that the customer preference would shift towards hybrids. Today, if you see, we don't have hybrids and the market is not really growing for hybrids. In fact, last year, hybrid penetration contribution was 2.5%, EV was also 2.5%. EVs have increased to 6% in August, hybrids remain at 2.5%. So, very clearly, it shows that Hyundai's strategy is very light that we are right now focusing on EVs, you know, and very strongly like Jose mentioned, 27 we will come out with a fully dedicated EV for us, you know, which will give us more traction. But going forward, we believe there will be a strong market and the cost of ownership, everything else should take care of itself. I cannot really comment on what kind of incentives government will give or not give but we believe that there will be enough customers down the line for all kinds of technologies and we will be offering the customers all kind of options whether it is hybrid, EV, CNG or any other powertrain.

Thank you.

Thank you so much. Just a clarification, within Hyster you would look at all possibilities as well, plug-in, strong, rated, standard.

Look, we gave a lot of information. My request to all of you is that let's limit to what we gave in the investor day so that fairness for everybody. So, I don't have any further comment on adding to the further to the investor day what kind of hybrids are going to come. Yeah. Thank you.

Thank you, sir. We'll wait for the details.

We'll take our next question from the line of Pramod Kumar from UBS Security. Please go ahead.

Thank you for the opportunity, sir. Sir, I think this question moved from a strategic perspective, not looking for exact specifics or timeline, but given the very high capex what you are planning to invest on R&D as stated in the investor day, what are are the kind of capabilities what you are aiming to build here over the longer term because you have pretty high localization levels. So, if you can just help us understand what are the kind of technological capabilities what Sundarimotor India will kind of build with these kind of elevated capex which will help us kind of understand how much as in how critical these are and what kind of global capabilities it gives you for export market as well and it's also in terms of filling any product portfolio gap or technology gap so if you can just help us understand the kind of substantial amount of money what all capabilities the listed entity will kind of have under this right now

Pramod Hari here. Okay.

The mid-term guidance 48 given this 45,000 crore. First of all, we need to understand the major activities where we are planning to spend this. One is out of this 45,000 crore, 40% would be for product related investments. When I say product, it is basically for we have already indicated about aggressive launch plan, right? So, 26 launches over the next 5 years. So that will obviously require investment into fixed assets like mouths, eyes, etc. So that is one. Another 40% would include mainly for capacity expansion, localization, systemization and other similar activities. So, this is a broad picture I would like to share, of course, on the CapEx part. Going forward, obviously, see, while we are investing all this money, obviously, we are looking at, you know, a good amount of growth, whatever they have indicated in terms of volume projection, market share, profitability. So, all these things, of course, you know, are linked to the investment aspect. Because when we are looking at the growth aspirations, obviously, it calls for investment aspect. Hope I have satisfied you.

No, but Hari, in terms of any plans of localizing battery chemistry or hybrid powertrain technology in India, I'm just trying to look at two aspects on the technological side, what all localization will happen here.

So again, Pramod, as we have discussed earlier also said, this is the broader guidance I think we will be in a position to give to this level at this moment. We will be in a position to share more details in due course of time. So hope you understand this.

Fair enough. The second question is on the product pipeline timeline. Given the elevated spend what we do and the kind of support we have from the global leadership for Hyundai India's plan, is it fair to assume that some of these launches could be ahead of what you have called out in the investor day because that course has been the track record of Hyundai even in the US market where Jose Munoz was here adding the business right before taking up the global leadership role.

So is it fair to assume that we can expect faster product launches from Hyundai going forward?

I think let's stick to this investor day you know let's stick to again and again I'm requesting whatever we have said on the investor day let us stick to that. You already want us to deny what was said in the investor day and move ahead. I do not think we can do that. So, let us stick to what we have said in the investor day. There is a lot of information there. I think we have set a new industry benchmark in terms of information. My request is let us stick to that and wait for further guidance from us at an opportune time. Thank you.

Fair enough. Thank you very much.

Thank you. Ladies and gentlemen, we will take that as the last question for today. I now hand the conference over to Mr. Mishit Jalan from Axis Capital for closing comments. Over to you.

Thank you everyone. At this point, I would like to thank the management for giving us the opportunity to host the call. With this, we conclude today's conference call. On behalf of Hyundai Motor India Limited, we thank you for joining the call and you may now disconnect your lines. Thank you so much.