Hyundai Motor India expects sport utility vehicles (SUVs) to account for up to 75% of its domestic passenger vehicle sales over the next 12-18 months, compared with 67% in the September quarter.

The company is also targeting high double-digit year-on-year export growth in the second half of FY27, supported by new SUV launches, rural demand and shipments to Latin America and Mexico. It is evaluating alternative shipping routes to address disruptions in West Asia.

Speaking during the company's Q2 FY27 earnings call on Wednesday, Managing Director and CEO Tarun Garg said the SUV share could increase as manufacturers introduce models across different price points and powertrain options.

"I would not be surprised if we reach 75% within the next 1-1.5 years. And maybe forward there is still some possibility to move further up," Garg said.

Hyundai expects two SUV introductions to support domestic sales in H2 FY27. The company launched the Bayon on October 26th at a starting ex-showroom price of Rs. 999,000 (US$ 10,485), adding to its portfolio alongside the Exter, Venue and Creta. Another SUV, including an electric offering, is part of its planned product expansion.

The outlook follows a change in Hyundai's domestic sales mix during Q2 FY27. According to its investor presentation, SUV sales increased 12.6% year-on-year, but their share of domestic volumes declined to 67% from 71%. Hatchback sales grew 41.3%, increasing their share to 19% from 16%, while sedan sales rose 24.8%, retaining a 13% share.

Garg attributed the recovery in smaller cars partly to GST reductions, which improved affordability and supported a segment that had been losing market share.

"First thing is we are very happy that all segments are growing. Because last few years, the hatch segment was continuously coming down," he said.

However, he expects SUVs to outpace hatchbacks over the medium term because of changing customer preferences and the introduction of additional models.

"While both segments should grow, because India is a growing market, at the same time, the pace of growth of SUVs will be higher than hatches is what we believe in," Garg said.

The trend is also reflected in industry sales. According to the Society of Indian Automobile Manufacturers (SIAM), utility vehicles accounted for 68% of India's passenger vehicle wholesales in Q2 FY27, increasing 34.2% year-on-year. Passenger car sales also increased by 24.9%.

Affordable SUVs and rural demand

Garg said lower-priced SUVs were attracting customers from segments traditionally dominated by hatchbacks, particularly in the Rs. 550,000-Rs. 800,000 price bracket. Hyundai expects models such as the Exter, Venue and Bayon to cater to different budgets through variations in space, technology and features. The Exter has recorded demand for its newer variants and CNG version.

The company will continue offering hatchbacks, including the Grand i10 Nios and i20, as well as the Aura sedan. Rural markets accounted for 26.6% of Hyundai's domestic sales in Q2 FY27, the highest share recorded by the company. Garg said SUVs represented approximately 68-70% of its rural volumes, broadly matching their share in urban markets. Around 60% of new sales network additions have been in rural areas.

Despite concerns about deficient rainfall and its potential impact on agricultural incomes, Hyundai had not observed a slowdown in rural sales during the preceding six weeks.

"As of now, we believe rural will still outpace the urban growth going forward," Garg said, while noting that the effects of weaker rainfall remained uncertain.

Hyundai's domestic sales increased 18.8% year-on-year in the September quarter, with growth across SUVs, hatchbacks and sedans.

Exports expected to recover in H2 FY27

Hyundai is targeting high double-digit year-on-year export growth in H2 FY27, supported by demand from Latin America and Mexico, new SUV models and alternative shipping routes amid geopolitical disruptions.

Garg said the company expected overseas sales to increase despite disruptions to its original export plans.

"We aim to deliver high double-digit growth in H2 on year-on-year basis in exports, supported by our strong products and operational effectiveness," he said.

Exports increased 3.7% year-on-year in Q2 FY27 and nearly 38% sequentially compared with the June quarter. However, first-half exports declined 7.6% year-on-year because of disruptions in international markets.

Saravanan T, Vice President, Finance, said the Middle East was the most affected export region during Q2. Hyundai partly offset the impact by increasing shipments to other destinations. Exports to the Middle East grew 57% sequentially, while Africa recorded growth of 35%. Shipments to Mexico increased 56%, followed by Latin America at 10%. The company has been working with logistics partners to identify alternative ports and shipping routes.

"We have been trying to move our shipments through different ports, through different routes," Saravanan said, adding that alternative logistics arrangements remained under evaluation.

Logistics costs and profitability

Saravanan said higher shipping and insurance expenses had not affected overseas margins because the additional costs had been passed on to distributors.

"The logistics cost has been rising, no doubt. But so far, we have not seen any impact on our margins because we could pass on the increased cost to the distributors," he said.

Hyundai also reported a year-on-year net foreign exchange gain. However, profitability remained under pressure from commodity costs. Consolidated EBITDA margin declined to 9.5% in Q2 FY27 from 13.9% a year earlier, despite revenue increasing 18.5% to a record Rs. 20.67 billion. Management attributed the decline mainly to raw material inflation. Higher volumes, an improved product mix and cost reductions supported a 20-basis-point sequential recovery in the EBITDA margin.

New SUVs to support exports

Hyundai expects its SUV portfolio to contribute to overseas sales in the coming quarters. Saravanan said exports of the new Venue were expected to at least double in FY27 compared with FY26, while Exter shipments were projected to increase by at least 50%.

The company also plans to export the Bayon to around 50 international markets, with shipments expected to begin in the next quarter. Launched in India on October 26th, the model forms part of Hyundai's domestic and international SUV expansion plans.

At its August 2026 CEO Investor Day, Hyundai Motor Company outlined a target to export approximately 30% of its India production volume by 2030, serving markets across the Middle East, Africa, Asia and South America.

Hyundai had previously guided for year-on-year growth of 8-10% in both domestic and export volumes in FY27. The higher export growth target for H2 follows weaker shipments in the first half. The pace of recovery will depend on geopolitical developments, shipping route availability and overseas demand.