New Delhi, July 31 -- Hyundai Motor India Ltd. has done well to defend margins even as domestic demand remained sluggish in the June quarter.

Gross margin rose 120 basis points (bps) year-on-year driven by a richer product mix, primarily higher contribution from its factory-fitted CNG (compressed natural gas) vehicles. Cost levers held firm even as discounts climbed to 3.4% of the average selling price. While staff and overhead costs limited the upside in the first quarter, Hyundai's ebitda margin drop was curbed to 20 bps, to 13.3%.

That was the good news.

On the flip side, Hyundai's volumes are not accelerating enough as domestic market demand remains patchy. Urban demand hasn't quite recovered and the company's launch calendar has b...