Hyundai Motor India Ltd (NSE: HYUNDAI) Q1 2026 Earnings Call dated Jul. 30, 2025
Corporate Participants:
K S Hariharan — Head of Investor Relations
Unsoo Kim — Managing Director
Tarun Garg — Chief Operating Officer
Gopala Krishnan C S — Chief Manufacturing Officer
Analysts:
Aniket Mhatre — Analyst
Binay Singh — Analyst
Kapil Singh — Analyst
Pramod Kumar — Analyst
Vipul Agarwal — Analyst
Raghunandhan — Analyst
Gunjan Prithyani — Analyst
Raghavendra — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q1 FY26 Earnings Conference Call of Hyundai Motor India Limited. [Operator Instructions]
I now hand the conference over to Mr. Aniket Mhatre from Motilal Oswal. Thank you. And over to you sir.
Aniket Mhatre — Analyst
Thank you, Sagar. Good evening and we welcome you all to the Q1 FY26 earnings conference call of Hyundai Motor India Private Limited. Today we have with us Mr. Unsoo Kim, Managing Director; Mr. Tarun Garg, Chief Operating Officer; Mr. Wangdo Hur, Chief Financial Officer; Mr. Gopalakrishnan C.S. Chief Manufacturing Officer; Mr. Saravanan T, Function Head Finance; and Mr. K S Hariharan, Head of Investor Relations from Hyundai Motor India Limited. I would like to inform you that the call is being recorded and the audio call and the transcript will be available at the company’s website.
I would now like to invite Mr. K S Hariharan, Head of Investor Relations from Hyundai India Ltd. Over to you, Mr. Hariharan.
K S Hariharan — Head of Investor Relations
Thank you, Aniket. Good evening everyone and welcome to the Q1 financial year ’26 earnings call.
Before we begin, I want to remind you of the safe harbor. We may be making some forward-looking statements that have 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 earnings presentation for the quarter, after which we will be happy to receive your questions.
Now I hand over to our MD. Over to you sir.
Unsoo Kim — Managing Director
Thank you Hari. Good evening and welcome to the first quarter earnings conference call for financial year 2026. As we enter the 30th year of operation in India, we are filled with immense pride in a journey that began 29 years ago with a bold vision to transform mobility for the Indian customers by not just providing smart mobility solutions but a future that reflects innovation, sustainability and a deep connection with our customer. Since our first car rollout, Hyundai has grown alongside India, becoming a trusted household brand and a strong contributor to the nation’s automotive and economic development. Over these three decades, we’ve gone beyond manufacturing cars. We have created experiences, introduced innovations and built relationships that have stood the test of time. Guided by our global vision of progress for humanity, HMIL will continue to drive product innovations and market growth while contributing meaningfully to the society.
Talking about domestic sales performance during the quarter, the prolonged softness in demand continued to weigh on the overall industry sentiments, driven by persistent macro challenges and further intensified by uncertain global environment. In these challenging times, we continue to remain agile and focus on advancing our core areas such as enhancing brand presence, periodic product updates, expanding our footprint and a consistent drive to enhance our rural presence. It is indeed a matter of pride that Hyundai Creta has marked 10 successful years of completion of enduring leadership in the mid size segment since its launch in 2015, a powerful testament to the unwavering trust and confidence our customers place in the brand.
Continuing with its legacy, Creta became the highest selling SUV during the quarter, fortifying its position as the Undispute Ultimate SUV. Our focus on enhancing the CNG adoption has led to record highest ever CNG contribution over 16% in the quarter, supported by the dual cylinder technology and the introduction of new variants of CNG offerings.
As part of our drive to expand rural presence, we continue to unlock wide spaces by expanding our network through strategic outlet additions and targeted rural marketing activities. These focused efforts have resulted in our highest ever rural penetration of 23% this quarter. In addition to the above initiatives, we have also strategically revisited our sales promotions schemes in response to the current market dynamics which enabled us to stay competitive in a challenging market environment. While the near term market sentiments continue to be mirrored, we expect a gradual recovery in industry demand on the back of a good monsoon festival season, coupled with government measures such as interest rate cut, income tax relief and upcoming pay commission.
On exports, we achieved a remarkable growth of 13% in the volume during the quarter, showcasing the global appeal of our products and thereby underscoring HMI’s positioning as a manufacturing hub for emerging markets. Notably, our export contribution in the overall sales mix improved to 27% during the quarter, reflecting our operational flexibility to navigate and balance the headwinds in the domestic market. We are confident to maintain a positive momentum in our export operations in line with our growth commitment.
Coming to the margin in a highly competitive landscape with heightened price pressures, we closed the quarter with a strong EBITDA margin of 13.3%. This resilience was driven by quality over sales, enhanced focus on boosting exports and disciplined cost control measures. As a part of our strategic expansion plans, recently we have commenced engine production at our Pune plant. This new facility will support both our Pune and Chennai operations, thereby enhancing efficiency and ensuring smooth scaling of production.
To conclude, we are pleased to announce that HMIL will be hosting its first ever Investor Day on the 15th of October 2025 to unveil our near to mid term plans. As you are aware, we already announced that we will be launching 26 products by the end of the financial year 2030. We will be sharing more details about these new launches, powertrain diversity and other strategies during the upcoming Investor Day. Thank you for listening.
Now I hand over to Hari.
K S Hariharan — Head of Investor Relations
Thank you sir. Let me begin with the key business highlights. As we mark 10 glorious years of Creta in India, we are humbled by the love, trust and loyalty our customers have shown us and we remain committed to raising the bar always. Since its debut in 2015, the Hyundai Creta has become a phenomenon. Such is its impact that the midsize SUV segment is now often referred to as the Creta segment in the country. Despite increased competition, the Hyundai Creta continues to lead from the front, maintaining its undisputed number one position in the country every completed year since its launch.
As part of our strategic expansion initiatives, we have kickstarted engine production at our new Talegaon plant, a significant milestone in our overall growth journey. Committed to the vision of Make in India, Made for the World, our brand i10 has scaled over 3 million unit sales in India and export markets cumulatively. With over 2 million units sold in India and over 1 million units exported to global markets, brand i10 stands as a shining example of HMIL’s commitment to delivering world class products.
At HMIL, we have consistently worked towards democratizing global technologies and high end features for a broader set of customers. We are proud to mention that the company achieved a remarkable milestone of selling over 1.1 million sunroof equipped vehicles in India over the last five years. Going forward, we shall continue with our commitment to shape the future of mobility by blending cutting edge technology and innovation and future ready product offerings.
In partnership with IIT Madras and Government of Tamil Nadu, we recently unveiled the design of the Hyundai H2 Innovation Center, a state-of-the-art research and development hub poised to serve as a catalyst for innovation in the field of green hydrogen technology and its ecosystem. This initiative demonstrates our commitment to Make in India by empowering local innovation, nurturing talent and supporting the development of scalable, affordable and sustainable hydrogen solutions.
Moving on to sales performance for the quarter. We achieved total sales of 1,80,399 vehicles in Q1 financial year ’26 compared to 1,92,055 vehicles in same period last year. In the domestic market we sold 1,32,259 vehicles compared to 1,49,455 vehicles in same period last year. The demand in domestic market continued to remain weak during the quarter amid challenging macro environment. Exports on the other hand grew by a strong 13% year-on-year to 48,140 vehicles as compared to 42,600 vehicles in same quarter last year. This is attributed to the strong global appeal for our products and our strategic focus towards optimizing exports, amid the challenging domestic market conditions.
Talking about the volume mix during the quarter. Despite challenging market conditions, our SUV contribution was quite strong at nearly 69% with a strong traction in both urban and rural markets. Hatchback continued to witness decline in line with the industry trend. Whereas sedan volumes remain flattish on year-on-year basis. Our fuel mix continues to evolve in alignment with consumer demand and regulatory trends. Our CNG contribution reached its highest ever number of nearly 16% during the quarter driven by great response to our dual cylinder technology and other product interventions on CNG, whereas EV contribution was at 1.4% during the quarter.
Now coming to the financial highlights for the quarter. Our revenue from operations stood at INR1,64,129 million in Q1 financial year ’26 as against INR1,73,442 million in Q1 of previous year. While the challenging domestic market conditions impacted the volumes and revenue, the company could maintain the margin resilience largely supported by better export numbers and cost control measures. EBITDA for the quarter stood at INR21,852 million as compared to INR23,403 million in Q1 financial year ’25.
We could maintain strong EBITDA margins at 13.3% as compared to 13.5% in Q1 financial year ’25. EBIT stood at INR16,571 million in Q1 financial year ’26 as against INR18,113 million in Q1 last year. EBIT margin was at 10.1% as compared to 10.4% in same quarter last year. PAT for the quarter was INR13,692 million as against INR14,897 million in Q1 financial year ’25. Despite the challenging market dynamics, we could maintain the pat margin at 8.2% as against 8.5% in Q1 of last financial year. It is pertinent to mention that EBITDA, EBIT and PAT margins in Q1 financial year ’26 are better than financial year ’25 full year margins.
We would also like to give more clarity on the key factors driving the margins during the quarter. On a year-on-year basis the margins were impacted mainly due to higher discounts. The impact was however minimized by better model mix, higher export contribution and cost reduction efforts. However, the reduction in margins on a sequential basis was largely due to the tail ended impact of government incentives and enhanced discounts in domestic market in response to the overall market dynamics. Whereas the cost optimization efforts through localization and value engineering continued during the quarter as well. And lastly, as announced earlier, we will be hosting our first ever Investor Day on 15th October 2025 in Mumbai and we will be sharing more details in due course.
This concludes my presentation. Thank you all for your time and attention. Now we open the floor for Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Please note that the 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. [Operator Instructions] Our first question comes from the line of Binay Singh from Morgan Stanley. Please go ahead.
Binay Singh
Hi team, thanks for the opportunity. Our general understanding is that exports tend to be more profitable than the domestic business. But when I look at this result where your gross margin is one of the highest that you’ve had, is it fair to assume that the export gross margin is 700, 800 basis point higher than domestic? Because that’s the only way to sort of deconstruct and make the margin. Is that a fair assumption?
K S Hariharan
Hi Binay, Hariharan here. So let me give clarity on our gross margin for this quarter. So if you look at on a sequential basis. So basically there are two important factors here. One is higher export mix or that is one reason. Apart from that we also had material cost optimization. Basically what we are doing is we are continuously working for improving our localization and other cost optimization efforts. So that also helped us with better gross margins during this quarter. If you look at on a year-on-year basis, again one is, export mix plus the material cost optimization. Apart from these, we also had better model mix in domestic during the quarter plus the price increase which we did in January this year. So all these things have collectively supported us with the better gross margin during this period. Hope I answered your query Binay.
Binay Singh
Yeah. Just a follow-up on that. In your Slide 9, you’ve given this cost and other reductions which is INR549 million. Is that the material cost reduction number that you are saying that you’ve seen the benefit quarter-over-quarter, because that’s quite small as a percentage it’s only 30 basis point or so. Is that the number when you’re saying material cost optimization?
K S Hariharan
So again if you look at maybe let me give more clarity. On a year-on-year basis, so at a PBT level, of course the major, the drag on the margins was because of the higher discounts as we had indicated in the presentation as well as. But this was — the major part of this was offset by, there are three important factors. One is the material cost reduction. So if you look at material reduction. So we had an impact of nearly 70 basis points during this quarter, followed by that we also had the price increase — yeah this is on a year-on-year basis.
Binay Singh
Okay, okay. No, I was focusing on quarter-to-quarter just to get the number of — yeah, quarter-to-quarter, what is the material cost benefit? Because I think from the presentation [Speech Overlap] yeah.
K S Hariharan
So even on a sequential basis we had a significant material reduction translating to nearly 50 basis points. So that also supported us on the margin front.
Binay Singh
Okay, thanks. And lastly on the export outlook. Last call we had given a 6%, 7% outlook for export growth this year. Now if I look at that guidance, it implies that exports for the remaining part of the year will grow at 2%, 3%. So are you changing your export guidance or maintaining it or do you expect the growth to slow down very sharply for the rest of the year in exports?
K S Hariharan
See Binay. What happens is of course, we have been doing very well in exports in the recent times. So the Q1 number reflects that. So what is happening is that we have been — we are seeing a very good demand for our products across different geographies, even if you look at this quarter. So for example, markets like Africa, we had seen a growth of 28%. Again, Mexico had — we have seen a growth of 14% like that. So we expect that the momentum should continue in the near future. But one thing we need to understand here is that there is also a seasonality factor, because normally what happens is exports for us generally it is better in first half of the financial year as compared to the second half. So considering that, I think we would like to keep the guidance at the similar level what we had indicated during last earnings time. Having said that, we will be continuously looking for opportunities to maximize our export volumes wherever possible.
Binay Singh
Great, great, thanks for that Hari. Thanks for the detailed response. I’ll come back in the queue.
Operator
Thank you. Our next question comes from the line of Kapil Singh from Nomura. Please go ahead.
Kapil Singh
Yeah, hi sir. Thanks for the opportunity. So first question is on the demand condition itself. You know we have seen a weaker demand through the last few months. If you could just give some details of region wise color, rural versus urban. Also we have seen some improvement in the mix of CNG as well as the feedback on Creta EV seems to be good. So electric vehicles, what kind of adoption and response you are seeing and can we see these numbers ramp-up going ahead?
Tarun Garg
Okay, a lot of questions there. So okay, let’s take one by one and then I’ll give you overall perspective. So Kapil, clearly the rural contribution continues to go up. In quarter one we had a rural contribution of 22.6%. And for your reference last year same quarter it was 19.9% and full year, last year, financial year it was 20.9%. So very clearly you can see that there is a clear shift in demand towards rural markets. And it is not a surprise because we have seen that the road infrastructure, the monsoon, the minimum support price, everything is going for rural and of course urban markets basically because they are affected by the general sentiment, whether it is reading about the world economy or what is happening or the uncertainty that does not affect the rural customers.
On the CNG front, again like MD mentioned in his opening comments, this was the highest ever CNG contribution quarter for us. If I go model by model, I would like to tell you that Aura CNG contribution was 89%. Exter CNG contribution was 30%. Nio CNG contribution was 18%. These three models put together, CNG contribution was 46%. And when you compare this with quarter one of last year it was 33%. So from 33% we have moved to 46%. And the moment you have in the denominator, the full base then from 11.4% we have moved to 15.6%. So this CNG contribution increase, besides increasing volumes has also helped us to meet the CAFE norms, Kapil. So just to tell you, quarter one CAFE our target was 117.286, actual is 112.856. So we have achieved CAFE very comfortably by a minus 4.430. And addition on this has been Creta electric. So which has received a reasonably good response. And also it has helped Creta not only being the number one SUV in this quarter, but if you see this calendar year, three out of six months, Creta was the number one model across segments. So I think it is really enhancing the brand Creta. And of course as we know we are celebrating 10 years of Creta. Overall demand seen so far looks sluggish. In fact, June was the lowest TIV in the last 30 months, if you leave aside December. I will repeat. June TIV was the lowest in the last 30 months if you leave aside December.
So this was not very good. But at the same time we are now entering the festival. So we have every reason to believe that the worst is behind us. We will start with the Kerala Onam, the Ganesh, Janmashtami, Rakhi, Independence Day and then of course the Navratra start. Just to tell you, this year Navratras are in September and Diwali is in October. Whereas last year both Navratras and Diwali were in October. So what will happen is this year both quarter two, financial year as well as quarter three the festival effect will be there. Also interest rates, although 100 basis point interest rate has been cut by the RBI this year, I believe the effect to the customer is still being passed.
If you remember Kapil, it was in 2008 when the last time 100 basis point interest rate had cut. So this is a very significant cut. Today’s newspaper says that maybe there will be another cut happening with the baseline inflation really at a very low level. Also income tax savings generally people do in the second half, we have the eigth pay commission coming in. 43% of our — 44% of our sales comes from salaried employees out of which 16% are government employees. So I think there are some positive offshoots. At the same time underlying there is definitely a weakness in the market so far. I hope I’ve answered all your questions in case there’s a follow-up. I’ll be happy to take it.
Kapil Singh
Yeah, so thanks for the detailed answers. Another question, the second question was on material cost reduction. Could you give some color what are the areas in which you are reducing this cost? What are the potential areas where you can reduce costs? And if you know any potential number you’ve identified like how much is possible to reduce over next, let’s say one or two years.
K S Hariharan
Kapil, if you look at on the material side, first of all last quarter of course the commodity for us was more or less stable. On the other side, again, as I mentioned, so there are two things here. One is we are continuously improving our localization level. If you look at the number for example a year back in financial year ’24, the localization level was somewhere around 78%. Within a matter of a year, we have significantly improved this number to nearly 82% now. So clearly we are reaping the benefits of our localization efforts in the current period. Apart from that, we also at the plant level, we also do some value engineering activities. We try to identify some scope of cost reduction at the plant level. So these things have also supported us in keeping the material cost under check. Going forward, again though, I cannot — we cannot give any specific target number, but we still see a lot of opportunities to improve the localization. For example, even for the EVs, you already know that we’ve already localized this battery assembly pack and we are also working for improving the localization and other EV components as well. So these things again should definitely help us even going forward to have a control over the material costs.
Kapil Singh
Thank you sir and congratulations on a strong performance and also beating the CAFE numbers by a good margin. Thank you.
Operator
Thank you. Our next question comes from the line of Pramod Kumar from UBS Securities. Please go ahead.
Pramod Kumar
Yeah, thanks a lot for the opportunity. My first question is on the comments you made on the rural demand trends and rural share going up is positive for you. But just want to understand because even with rural share going higher, we see that SUV continue to be seeing a pretty good traction for you. It’s not slipping. So just wanted to understand what are you discovering as you’re going more into the rural network in terms of consumers purchase behavior? Because historically rural is kind of, what do you say, bracketed along with small cars, hatches and not SUVs and more premium products.
But looking at your ASP and the kind of SUV category mix, what is shown doesn’t seem to be affecting you as you’re increasing your exposure to rural. So if you can just help us understand and Tarun, especially from your vantage point, you’ve been in the industry for long enough from your earlier days to now. What is the kind of evolution what you see in the rural demands and what does it also kind of mean for as we look ahead post-monsoon demand revival or festivities and also the pay commission coming in, will there be a difference in the buying pattern this time compared to the last day commission? Sorry for the long question, but I hope I kind of made them — made my — my questions pretty clear.
Tarun Garg
No, no question is long and answer will be short. Very, very clearly, to answer your question, rural SUV penetration today stands at 68.8% for me, so very clearly I think the key buying factor for rural has changed. You asked me that. Yes, I have spent 32 years. I never expected that rural will come out of small markets — small cars. But that said, if you see 2015, frankly speaking, SUVs used to contribute 13% to the overall sales. In fact, before Creta, 2014, it was 9%. So actually, there’s a paradigm shift across and rural has really caught up very, very fast. And today rural customers have also become aspirational. And I think one key reason for that is that the road infrastructure has improved tremendously. Earlier, if you see rural customers were very hesitant to buy a premium car because they were not very sure about that how the reliability, because the road infrastructure was bad.
The second thing is the service. If you see Hyundai, our service network and for that matter the entire industry, if you see very, very strong in service network. So today one is fixed network. We have 586 service network in the rural areas, total outlets. Plus we have urban, I mean rural service vans, 110 exclusive mobile service vans which are serving the customers in the rural areas. So that is also giving the customers the confidence. I think the third is if you see while the urban economy is or urban sentiment is affected by the general, what is happening on tariffs, what is happening to the world economy, what is happening to the Russia-Ukraine, war, what is happening to, general, general stuff, rare earth matter. But rural is very simple. Rural is monsoon, MSP, and I think very clearly, if you see over the past three, four years, I think monsoon has been not only more than normal, but also not very, very skewed in favor of only particular regions. It has been very, very well spread across the country. Even this year it has started on a very positive note. So I think all this while what is happening is aspiration is taking over functionality and Hyundai is clearly reaping benefits. It is also reflected in terms of future because you asked a question about future.
So what we are doing now is the further network. I think although currently 47% of my network is rural and 53% is urban. But if you ask me seven out of 10 outlets now I am making our own in the rural areas. So I have expedited the network in the rural areas considering that what kind of demand I am seeing there and considering especially the affinity to SUVs which directly helps me. I hope I’ve answered your questions in case there’s a follow up. I’ll be happy to take.
Pramod Kumar
Yeah, Tarun sir, on the pay commission. What does it imply for pay commission as they get the windfall, there will be a repeat of the last pay commission when it was more dominated by small cars. So how do you see that linking the kind of changing consumer preferences?
Tarun Garg
So if you see one, 16% of my sales is to government employees, 16%. So very clearly that is clearly benefited by the pay commission. I don’t think that the same fund of small cars applies even for the government employees. Very clearly, even their aspirations are coming in, that is point number one. Point number two, this whole funda of small cars, I think people are misinterpreting it to hatches. So I’ll just like to explain this. If you see hatches percentage is continuously going down, very clearly it is going down. In quarter one it has gone down to 21%. However what is happening is INR6 lakh to INR8 lakh segment where people earlier used to buy hatches are now buying cars like Exter or say for that matter Punch as well. And that segment is really growing at a very fast pace. So customer choice has moved from hatches to SUVs and in the same price range because obviously he gets a better ground clearance, he gets a better visibility, he gets six airbag as standard, he gets a sunroof, he gets a very good body type. So I think this is how you need to now differentiate when you say small cars, it is no more about hatches. I think we have to see whether the price segments are also moving up.
And I think less than INR10 lakh and more than INR10 lakh is not really moving too much in favor of more than INR10 lakhs. I mean just to — yes it moved two, three years but now last one, one and a half years it is very stable. But yes, more and more SUVs are getting sold. The last point is about the first time buyer, where very interestingly let me tell you even — I mean first point is at an all model basis our first time buyer percentage has gone up from 32% in 2020 to 40% now in 2025. And even in models like Creta first time buyer percentage is 32%. It used to be 13% in 2020, now it is 32%. Even in Venue it is 45% now it it used to be 29% earlier. So you can see how clearly even the first time buyer because of good financing, because of more and more youngsters coming in, because of the children playing also an important role in influencing the decision of their parents. I think all these factors are making aspiration more importance than functionality resulting in better SUV sales. Thank you.
Pramod Kumar
Sir. Just a follow-up Tarun sir. Network expansion, you talked about seven out of 10 incremental being rural. But any broad numbers as to where you want your target to — your overall network to grow for this year and next year in terms of number of outlets which you want to add at the broad network level, urban plus rural.
Tarun Garg
Look I would only say that we are very flexible in this. We continuously see the market. And we do a balance between the viability of the network. Also very important, as you know, if you see FADA dealer satisfaction last three year average, Hyundai is ranked number one and way ahead of its peers as well as industry average. So I think we need to keep track of that as well. And so what we are doing is especially in rural areas, we’re going for new dealer companies. We are giving opportunity to the existing dealers to expand. In fact, 75% of my overall expansion is being given to existing dealers so that they can keep their costs low and sales per dealer company continues to go up. So I will not give you the targets for this year and next year because obviously this is a confidential strategy. But at the same time, like I said, a big focus area on rural and today I am present in 75% of the districts in the country and it continues to go up almost 50 to 60 LOIs are in the pipeline which should be activated in the next five to six months. So I think this is the best I can do in terms of sharing the data. Thank you.
Pramod Kumar
So, last question on Creta. It’s been a phenomenal achievement that the brand that triggered the SUV segment is still without any incentives because the slowdown is clearly creeping up the price points. We’ve seen that last year with the small SUVs. This year with the midsize SUVs practically outside of every model is on a discount and abundant inventory available. So how do you see that? It’s of course one thing which you’d be very proud of and what you’ve done here and the affection of the customers very much with you. But isn’t that a bit of a risk as well? When you look at the year forward before the big upgrades come in on Creta or the big platform change? How — what is the — should we expect that there will be discounts or incentives which will creep up in Creta as well? Or you have a strategy around to keep it kind of insulated from the discounting bit? Because once you start discounting there’s never going back. Right? So just want to understand your thoughts on that.
Tarun Garg
This question has been asked to me every three years, last three — since the last three years that will Creta continue to grow? Happy to report that continuously every year it has grown double-digits, very healthy double-digits. Not because Creta remains the same. Please see how — what we have done to the Creta? You saw the facelift which we did in the 24th of January. It was almost like a full model change. And the result was fabulous. And not only the product, if you see the entire marketing campaign, the brand ambassador, what we have done now the 10 year thing has come in, you would have seen the kind of activities we are doing. So the whole idea is to continue to keep on creating excitement around the brand. Number one.
Number two, if you see the kind of variants we have been able to introduce in Creta, like for example, we got a feedback that customer wants an automatic in the lower trims. Now that gives me an opportunity to maintain my ASP average selling price at the same time, give more opportunity to the customers by democratizing the AT, or maybe bringing sunroof in the lower variants as well. So, rather than joining the price war or the discount war, what I’m doing is bringing in those premium features in the lower variants, which really helps me to do that. That is the point number two.
Number three is, if you see on dependence on Creta, even Venue today is contributing 17% to my sales and it is number 14 in the list out of total 100 brands, even Exter contributes 13% to my list, i10 10%, Aura 11% continuously going up i20 9%. So I think whether you see hatches, sedans, SUVs unlike many of the industry players who are very very skewed towards only one, we have a very healthy mix of hatches, sedans and SUVs. And obviously because SUVs is the way where customers are wanting more and more launches happening there and more and more contribution also coming there. At the same time I would say that sedans as well as hatches continue to be a very important part because they’re also helping me to meet CAFE. If you see the CNG penetration in Aura is 89% and even in Exter it is very high more than 30%. And that has also helped me in addition to the electric to meet CAFE.
Pramod Kumar
Thanks a lot sir.
Tarun Garg
Yeah, yeah, thank you.
Pramod Kumar
Yeah, thanks a lot and wish you all the best. Thank you.
Tarun Garg
Thank you.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Vipul Agarwal from HSBC. Please go ahead.
Vipul Agarwal
Thank you for taking my question. So my first question is on the localization of your ICE portfolio. So it’s currently around 18% of your parts are still imported. So is it possible to pin down a few parts which are still — which can be localized pretty easily or maybe in a time frame of next couple of years and what kind of margin expansion we can expect from that localization over there?
K S Hariharan
Vipul you are asking about ICE localization and ICE portfolio. Is it correct?
Vipul Agarwal
Yes. Localization and ICE portfolio. Yes.
K S Hariharan
Yeah. So the localization level as I had mentioned earlier, which is about 82%, it is a blended localization including EVs. But of course if you look at our EV contribution in our total portfolio, it is quite less in the current scenario. So but what we are doing is that as I mentioned, so we have been continuously trying to improve the localization. We have been identifying a lot of opportunities recently, even in last year, we have localized many of the components. For example, even Sunroof is a classic case which we have localized last year.
So these are all some of the initiatives we have taken and that is giving us a lot of advantage even in terms of margins. So going forward again, see what we are doing also is that we have a dedicated localization team working as part of the procurement function. So their role is basically to identify such kind of opportunities wherever we can go for such implementation as such. But one thing we need to understand again, there are some items, for example, if you take the electronic items, the chips, where the availability of these components in the domestic market is still a challenge. So those cases obviously we need to go for import sourcing only. Nevertheless, we will be continuously looking for opportunities here. Wherever possible we will try to go for the localization.
Vipul Agarwal
Sorry, actually my question was like you localized the Sunroof, so do you have any big parts in pipeline which can be localized soon and are available? Or maybe it’s like it’s pretty visible at this point in time that this part will be localized in next couple of years. If you can share, it’s possible?
K S Hariharan
Maybe little difficult to give specific details, but as I mentioned, see there are a lot of opportunities. Again as I mentioned last year like financial year ’24, the localization level was 78% and we have improved to 82% in the current scenario. So you can understand, quite a lot of efforts we have done here. So this will be a continuous process. I think wherever there is opportunity we would like to capitalize on that.
Gopala Krishnan C S
Added to that we have been localizing the high technology parts by partnering with the global players and this will not only help us to reduce cost but at the same time we can derisk the entire supply chain. As Hari said, we’ll continuously focus, we’re giving a very strong focus in line with the government of India’s initiative, the Make in India program.
Vipul Agarwal
Understood. Thank you sir. So my second question is on the premiumization trend. Like sir already mentioned that now you are giving — you are basically demoralizing the high end features like AMT and other features. What we see is like now light seats, dashboard mostly sunroof had largely available across the models. So what — which part now what — what part can be premiumized now? Like maybe if I’m looking from say like three — if I take three years perspective and take a revenue CAGR. So how — what would be your aspiration to grow beyond the growth of — beyond the volume growth CAGR in next three to four years and that — which will be driven by premiumization. Because I think that large part of premiumization is largely done in the industry now.
Tarun Garg
Not really. I would say I’ll beg to differ with you. Even on sunroofs quarter-on-quarter from 51% last year we have moved to 54.4%. And let me answer your question. One is more and more models with sunroof. Even today in my portfolio, for example, hypothetically speaking, Nios does not have a sunroof. Aura does not have a sunroof. Why not? So I think opportunities like this exist. This is point number one. Point number two more and more features are coming in. It’s not only sunroof. Suppose tomorrow — today in-car payment has come in. Maybe more and more models can come with in-car payment. Then like I mentioned, in the lower trims we are adding automatics, we are adding sunroofs, we are adding ADAS. So as Indian market evolves, I think there will always be an opportunity. And the biggest point is because we are a part of Hyundai Motor Company where, please understand, as Hyundai Motor Company we are very strong in the US market, We are very strong in the Korean market, we are very strong in the European market. So these are all developed markets. So we get a firsthand experience of what are the features which are working there. And typically what we have seen is with a couple of years lag, some of those features are very, clearly they become a rage in India. And Hyundai has been a benchmark creator here. Like, for example, two and a half years back we introduced ADAS. And today ADAS is contributing a good 12.5% to my overall sales and eight, nine product — eight, nine of my models are having ADAS already because — and then that time I had not predicted maybe that highways will have a speed of 120 kilometers an hour. But then it has happened in India.
So I think as India grows, as India becomes younger and aspirational there will be — and as our technology prowess goes up and as the electronic architecture in the system in the car becomes more and more important with more and more software defined vehicles. I think by being a part of Hyundai Motor Company will give us a huge edge in more and more opportunities in localization — in premiumization. But I cannot answer how much basis point it will help in profitability. That is very, very hypothetical and very, very difficult to answer. Thank you.
Operator
Thank you. Our next question comes from the line of Raghunandan from Nuvama Research. Please go ahead.
Raghunandhan
Thank you sir. And congrats on better quality of sales. On my first question. We are strong in UVs and Creta has been phenomenal. But there are white spaces in MPVs. Considering there is a plan to launch eight models by FY27, can we expect any action in the MPV space?
Tarun Garg
As you know that we have already announced that we are going to have 26 new models including facelifts in the next five years. So on 15th of October we are going to have the Investor Day and I think more details on the future models you can expect on that day. Please kindly bear with us till then. Thank you.
Raghunandhan
Sure sir. We’ll patiently wait for the event. Thank you. Secondly, on Talegaon plant engine manufacturing started recently. Would vehicle manufacturing be on track to start before the end of the year and also by end of next year what kind of capacity utilization ramp-up can happen there given that you would marry all the new production to happen from there?
K S Hariharan
Raghu if you see, yes, recently we have started the engine production. Even the vehicle production plan is well on track as we had earlier committed. We are planning to start the vehicle production from this plant in quarter three of the financial year ’26. So that is point number one. And number two on the utilization level again as we had indicated earlier also, during the initial period the capacity utilization will be little low only. But as we move forward we would like to accelerate basically both on the export side as well as well as on the domestic side. Because as we had discussed earlier, also going forward domestic, we expect the gradual recovery should be happening with all these stimulus measures from the government side. Even on the export side, we expect the momentum should continue.
Basically, as you know, we would like to position ourselves as the manufacturing hub for the emerging markets. So we are looking at a lot of opportunities here. So once this capacity commences, I think that really should open up lot of opportunities for us even on the export front as well. So, that is what we are basically looking forward in the near future.
Raghunandhan
Thank you, Hari. Just lastly, can you share the discount number as a percentage of sales?
Operator
Thank you so much sir.
K S Hariharan
So discounts during the quarter was 3.4% on ASP, a domestic discount.
Operator
Thank you. Our next question comes from the line of Gunjan Prithyani from Bank of America. Please go ahead.
Gunjan Prithyani
Yeah, hi. Thanks for taking my questions. I actually had the follow ups on margin. I think Raghu asked about this discount. Is this 3.4% comparable to the 2% that you shared in the last quarter?
K S Hariharan
Yes, yes it is comparable. The market situation has changed. But two things you must keep in mind. One is all the results obviously include this 3.4%. So all the EBITDA and the PAT, PBT, whatever you are seeing includes that. That is point number one. Point number two, ASP has actually gone up quarter-on-quarter. 7.60 lakhs last year same quarter and now 7.65 lakhs. So in a market where competition is giving discounts to the tune of 4.5%, 5% year-on-year.
So in a market where competition is giving discounts, to the tune of 4.5% to 5%. Whereas, and of course having price cuts, we have been able to quarter one financial ’25 to quarter one financial ’26 increase our ASP and keep the discounts much under check. So yes, so this is our strategy going forward and we believe that similar levels or slightly lesser levels should be going forward as well.
Gunjan Prithyani
Yeah, no. I think what I’m trying to understand is given the discount rise, when I look at the numbers now, about 1.4 percentage point increase versus last quarter on discounts and then the operating leverage being lower in this quarter. I’m just trying to sort of think through that you’ve been able to deliver very, very resilient margin in that context. So is there anything beyond product mix? And look, because you did speak about RM 50 basis point, is the model mix and export mix that big a tailwind that we were able to offset almost 2 percentage point impact of discounts and lower operating leverage?
K S Hariharan
Gunjan, yes, one is basically as you had rightly mentioned, one is the export mix. Higher export mix we had, whether it is a sequential basis or even on a year-on-year basis, the export mix has been much better. We also had the price increase in domestic market in the month of January. So that also has supported us with some margin improvement. Apart from these things, in fact, if you look at even the model mix, the model mix in domestic was quite positive especially with more of Creta sales. I think that is also supported as positively during this period. And of course material side as I already explained. So the localization efforts and the other cost optimization efforts have really supported us big time as far as the margin improvement is concerned.
Gunjan Prithyani
Pretty solid performance in that context. Just to be clear, there is no impact of engine plant commissioning in this quarter and if there is any, can you just give us some sense, how should we think about the depreciation line item going into the next quarter for this plant?
K S Hariharan
So this quarter we started our engine operation in the middle of June month only. So as such very negligible impact in the P&L.
Gunjan Prithyani
Okay, okay. And my second question is on the export business now export, the growth, the volume growth is pretty strong. But I do see the ASP has come off pretty meaningfully. Is there — can you just throw some light on, is this a geo mix change? Is it more, sort of aggression in the export markets? Something that we should be reading from a strategy perspective or some color on that, please.
K S Hariharan
So again on the ASP front, if you look at on a year on year basis export, there is some decline in the ASP. This is mainly because of the increased discount level in the recent times. See what is happening is that we have been seeing very strong demand for our products across the different markets. Even in the recent times we are getting lot of fleet orders. For example markets like Middle East Africa for our models like Verna, Aura we are getting lot of fleet orders. So in order to meet these demand we have also supported with some higher discounts.
So that has basically, resulted in some reduction in the ASP for exports. However, if you look at on a sequential basis, ASP is more or less stable for us on the export front.
Tarun Garg
Basically if you see, I think this is a very good lever and I think as a strategy we decided that yes, in terms of capacity utilization as well as overall margins and like yourself mentioned that solid performance in that context. I think one reason was that we were able to increase enhance export by giving a little bit of a higher incentive. So I think we look at it as a holistic strategy. Quality of sales and MD mentioned in his opening remarks as well. And since IPO we have been mentioning this balance between domestic and export and this lever that we enjoy versus some of the other companies. I think that really helps us to navigate through some of these challenging domestic market environment and that is what we have used. Thank you.
Raghunandhan
Got it. This last question if I can.
Operator
Sorry to interrupt Gunjan ma’am.
Gunjan Prithyani
Just very quick one.
Operator
Ma’am there are several other participants waiting for their turn.
Gunjan Prithyani
Okay, I’ll fall back in queue. Thank you.
Operator
Thank you so much. Our next question comes from the line of Raghavendra from Ambit Capital. Please go ahead.
Raghavendra
Yeah, thank you sir. Congrats on great set of numbers. Just can you give me some quantitative view on how you are looking at things progressing on CAFE III — CAFE-III norms and likely implication on cost if you can segregate between a small car and a UV kind of vehicle. Any directional guidance you’d like to share?
Tarun Garg
Look, Hyundai has been in India now for 29 years. We have met all regulations and we have always believed that SIAM is the one agency which talks to the government and does the best for the auto industry. As far as general, I would say that as a part of HMC, HMI is one company which has access to all technologies. We have petrol, we have CNG, diesel, strong hybrid, plug in hybrid, CNG, even for that matter even hydrogen vehicles, you know. So we are watching this and waiting for the final notification to come in. And as we have met in the past and as we are doing it currently, we are fairly confident that we will be able to meet CAFE-III, but we do not have any individual view. We will go by SIAM’s collective view from the auto industry. Thank you.
Raghavendra
Okay. That’s all from my side.
Operator
Thank you. Ladies and gentlemen, we’ll take this as our last question for today. I now hand the conference over to Mr. Aniket Mhatre for closing comments.
Aniket Mhatre
Thanks, Sagar. Ladies and gentlemen, that concludes our conference call for today. On behalf of Hyundai Motor India Limited, we thank you for joining us. And you may disconnect your lines. Thank you. Have a great day ahead.