The Hyundai exhibition booth on the New York International Auto Show on March 28, 2024.
Danielle DeVries |
Hyundai Motor The company on Thursday reported record quarterly profit and revenue on strong sales of high-margin cars and announced an expansion of its hybrid product lineup to arrange for possible changes in U.S. policy on electric vehicles after the election.
Its better-than-forecast results helped ease growing investor concerns about slowing consumer demand for cars, which had hit a few of its competitors, including fordJapan’s Nissan Engine and Tesla within the April-June quarter.
However, Hyundai also warned of an uncertain outlook as a consequence of intensifying price war as inflation and high rates of interest put pressure on consumers.
“As consumer demand for cars weakens, we expect more competition and likely an increase in incentives … leading to a more difficult business outlook,” said Kia Corp., the world’s third-largest automaker by sales, in an earnings release.
Hyundai reported net profit of 4 trillion won ($2.9 billion) for the April-June period, up 23 percent from a 12 months earlier and well above the three.4 trillion won average of 21 analyst estimates compiled by LSEG SmartEstimate.
The net profit was the very best quarterly profit for the reason that previous record high within the second quarter of 2022.
Hyundai outperformed a few of its rivals by boosting sales of its premium SUV models and hybrid vehicles within the United States, a move that also helped the corporate offset ongoing weakness in its domestic market.
In South Korea, Hyundai’s second-largest market, domestic automobile sales fell 10 percent within the second quarter, down from a 16 percent decline within the previous quarter. Consumers proceed to struggle with rising inflation and a weak economy.
Hyundai announced it might expand its hybrid offering as demand for electric vehicles slows worldwide and uncertainty about U.S. policy on electric vehicles increases.
Former President Donald Trump, the Republican nominee, has been critical of Democratic President Joe Biden’s electric vehicle policy and has said he’ll “end the electric vehicle mandate” if he wins the election.
“Even if Trump wins the election, we do not expect the inflation reduction law to be repealed,” Hyundai Chief Financial Officer Lee Seung Jo told analysts in a quarterly earnings call, referring to Biden’s clean energy policies.
Lee said the corporate continues to watch opportunities and plans to expand its hybrid vehicle offerings “to prepare for a possible downsizing of the IRA package.”
Hyundai said the profitability of its hybrid models was much like that of its gasoline cars and stressed the growing contribution of this segment to its bottom line as sales of pure electric vehicles fell by almost 1 / 4.
Hyundai’s vehicle sales within the U.S. rose 2.2 percent within the second quarter. High-margin SUV sales accounted for about 80 percent of total sales, while hybrid vehicle sales increased 42 percent in comparison with the identical period last 12 months, Hyundai said.
The favorable exchange rate within the second quarter also benefited Hyundai’s profit growth.
The won depreciated 4.3 percent against the dollar within the quarter from the identical period last 12 months, boosting Hyundai’s repatriated sales and profits.
Hyundai shares closed 2.7 percent lower ahead of the outcomes release.
