Updated April 25th, 2024 at 13:01 IST

Hyundai Motor Q1 profit dips 2.4%, company eyes India IPO

Hyundai said that domestic sales were hindered by a temporary halt in production at its Asan plant, currently undergoing revamping for EV production.

Reported by: Business Desk
Hyundai Motor | Image:Hyundai
Advertisement

Hyundai Motor Q1 earnings: Hyundai Motor Co, South Korea's leading automaker, faced a 2.4 per cent decline in first-quarter profit, predominantly attributed to a notable drop in domestic sales. The company cautioned of a challenging business landscape amid escalating competition and uncertain global economic conditions.

Meanwhile, Hyundai Motor Group's Executive Chair Euisun Chung recently visited India, the automaker's second-largest market, to explore mid- and long-term strategic initiatives. Discussions included considerations for an initial public offering (IPO) of its local unit, a move aimed at accelerating expansion in a country where Hyundai has operated for over 25 years and enjoys popularity for its affordable vehicles.

Advertisement

In contrast to more optimistic projections from its US counterparts such as General Motors and Ford Motor Co, which reported robust profit growth this week driven by steady pricing and demand for gasoline-engine vehicles, Hyundai delivered a cautious outlook and tepid performance on Thursday.

"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 stated in a press release.

Advertisement

Hyundai, ranked as the world's third-largest automaker by sales alongside affiliate Kia Corp, witnessed a 1.5 per cent decline in vehicle sales, with a total of 1.007 million units delivered during the first quarter.

The company faced a stark 16 per cent plunge in domestic sales, South Korea being its second-largest market after the United States. This decline was primarily attributed to consumer struggles amid surging inflation and economic downturns.

Advertisement

Hyundai further highlighted that domestic sales were hindered by a temporary halt in production at its Asan plant, currently undergoing revamping for electric vehicle (EV) production.

On a positive note, vehicle sales in the US market surged by nearly 10 per cent, mirroring the trend among other traditional automakers experiencing robust profit growth.

Advertisement

The global market witnessed a notable 17 per cent increase in sales of hybrid vehicles, indicating a growing consumer preference for more affordable options over pricier pure electric cars.

Hyundai outlined its commitment to expanding its electrified model lineup worldwide by introducing more hybrids and unveiling new IONIQ EV models.

Advertisement

In February, Reuters reported Hyundai's appointment of investment banks to advise on its anticipated $3 billion India IPO, which is expected to bolster its presence in the Indian market.

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, a move aimed at enhancing competitiveness in the Indian market.

Advertisement

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 surpassing analysts' average forecast of 3.0 trillion won by LSEG SmartEstimate.

Revenue witnessed a 7.6 per cent increase to 41 trillion won, buoyed by robust overseas sales and a weaker local currency that boosted repatriated earnings.

Advertisement

Following the announcement, shares in Hyundai Motor closed down 1.0 per cent, compared to a 1.8 per cent decline in the benchmark KOSPI index.

(With Reuters inputs.)

Advertisement

Published April 25th, 2024 at 13:01 IST