First-quarter results: Hyundai Motor’s profit falls 2.4%, hit by weak domestic sales

South Korean carmaker Hyundai Motor Co’s first-quarter profit fell 2.4, hit by a drop in domestic sales and warning of a challenging business outlook due to increasing competition and uncertain global economic conditions.

Hyundai’s cautious outlook and weak performance reported Thursday contrasts with more bullish forecasts from the US

rivals such as General Motors and Ford Motor Co, which reported strong profit growth this week thanks to stable prices and demand for gasoline-powered vehicles.

“We expect competition among automakers to intensify, increasing related costs… while global macroeconomic uncertainty also increases. We expect challenging operating conditions to continue into the future,” Hyundai said in a statement .

The world’s No. 3 carmaker by sales, together with subsidiary Kia Corp, sold 1.5 fewer cars, good for 1.007 million units in the first quarter.

Sales in South Korea, the second-largest market after the United States, fell 16 as consumers struggled with rising inflation and a weak economy.

Hyundai said domestic sales were also affected by the temporary suspension of production at its Asan plant, which is being revamped for the production of electric vehicles (EVs).

Auto sales in the U.S. market rose nearly 10%, following other legacy automakers that are experiencing strong profit growth.

Sales of hybrid vehicles have increased by 17% worldwide, highlighting growing consumer interest in cheaper vehicles over more expensive pure electric cars.

Hyundai said it will continue to expand its electrified model lineup globally by introducing more hybrids and new IONIQ EV models.

Parent company Hyundai Motor Group said executive chairman Euisun Chung was visiting India, where it is the second-largest carmaker, and is considering an initial public offering of its local unit this week to discuss medium- and long-term strategies.

In February, Reuters reported that Hyundai had appointed investment banks to advise on its initial public offering in India of at least $3 billion.

The IPO is aimed at accelerating its expansion in a country where it has been operating for more than 25 years and where its affordable cars are popular with price-conscious Indians, said analysts and four people familiar with the carmaker’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 the January-March period, up from 3.3 trillion won a year earlier, but higher than the average forecast of 3.0 trillion won by LSEG SmartEstimate.

Revenue rose 7.6 to 41 trillion won, helped by solid foreign sales and as the weaker local currency also boosted repatriated earnings.

Shares in Hyundai Motor closed 1.0 lower, compared to a decline of 1.8 in the benchmark KOSPI.

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First print: April 25, 2024 | 1:36 PM IST