South Korean automaker Hyundai Motor Co’s first-quarter profit fell 2.4, hit by a tumble in domestic sales, and it warned of a challenging business outlook due to rising competition and uncertain global economic conditions.
Hyundai’s cautious outlook and weak performance reported on Thursday contrast with more bullish forecasts from its U.S.
rivals such as General Motors and Ford Motor Co who this week reported strong profit growth thanks to stable pricing and demand for gasoline-engine vehicles.
“We expect competition among automakers to intensify, raising related cost burden… while global macroeconomic uncertainty is also growing. We expect challenging business conditions to continue going forward,” Hyundai said in a statement.
The world’s No.3 automaker by sales along with affiliate Kia Corp sold 1.5 fewer vehicles, delivering 1.007 million units in the first quarter.
Sales in South Korea, its second-biggest market after the United States, slumped 16, as consumers grappled with surging inflation and a weak economy.
Hyundai said domestic sales were also impacted by temporary suspension of production at its Asan plant, which is being revamped for production of electric vehicles (EVs).
Vehicle sales in the U.S. market jumped nearly 10, tracking other legacy automakers that are enjoying strong profit growth.
Sales of hybrid vehicles jumped 17 globally, underscoring consumers’ growing interest in more affordable vehicles over more expensive pure electric cars.
Hyundai said it would continue to expand its electrified model lineups globally by introducing more hybrids and new IONIQ EV models.
Its parent Hyundai Motor Group said Executive Chair Euisun Chung visited India, where it is the second biggest automaker and is considering an initial public offering of its local unit, this week to discuss mid- and long-term strategies.
In February, Reuters reported that Hyundai had appointed investment banks to advise on its at least $3 billion India IPO.
The IPO is aimed at accelerating its expansion in a country where it has operated for over 25 years and where its affordable cars are popular with price-conscious Indians, according to analysts and four people familiar with the car maker’s plans.
Earlier this month, Hyundai and Kia signed a memorandum of understanding with India’s Exide Energy Solutions Ltd to supply batteries for their electric vehicles in a bid to boost competitiveness in India.
Hyundai reported a net profit of 3.2 trillion won ($2.32 billion) for January-March, down from 3.3 trillion won a year earlier, but ahead of an average forecast of 3.0 trillion won by LSEG SmartEstimate.
Revenue rose 7.6 to 41 trillion won, helped by solid overseas sales and as a weaker local currency also boosted repatriated earnings.
Shares in Hyundai Motor closed down 1.0, versus a fall of 1.8 in the benchmark KOSPI.
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First Published: Apr 25 2024 | 1:36 PM IST