Last Year's Performance Swings for Hyundai Kia Motors, This Year They Run with 'New Cars'

Hyundai Motor's Operating Profit Expected at 3.53 Trillion KRW Last Year... Kia Nears 2 Trillion
Rebounded in H1 Due to Mix Improvement and Exchange Rate Effects, but Slowed in Q3
Mass Production of Key Models G80, Sorento, and Avante Started in Q1 This Year

Hyundai Kia Motors Yangjae Office Building (Photo by Yonhap News)

[Asia Economy Reporters Suyeon Woo, Jihui Kim] Last year, Hyundai Kia Motors' quarterly performance fluctuated wildly, but it is expected to achieve a perfect V-shaped rebound on an annual basis. This year, the company has set a strategy to stabilize its performance, which is at the early stage of recovery, by leveraging new car momentum, including the start of mass production of three new models in the first quarter alone.

According to FnGuide on the 20th, the 2019 annual performance consensus among securities firms for Hyundai Motor is sales of 104.8144 trillion KRW, an 8.2% increase from the previous year, and operating profit of 3.5256 trillion KRW, a 45.5% increase from the previous year. For Kia Motors, sales are expected to increase by 5% to 56.8872 trillion KRW, and operating profit is projected to soar by 70% to 1.969 trillion KRW.

If these forecasts hold true, Hyundai Motor's operating profit will mark a rebound for the first time in seven years after six consecutive years of decline since 2012 (8.4406 trillion KRW) through 2018. At the same time, Hyundai Motor is expected to easily achieve its first-ever annual sales of 100 trillion KRW. Kia Motors, which recorded operating profits in the mid-2 trillion KRW range annually, saw a sharp drop to 600 billion KRW during the 2017 THAAD (Terminal High Altitude Area Defense) incident, followed by a slight rebound in 2018, and last year’s forecast has risen enough to aim for operating profits in the 2 trillion KRW range.

In the first to third quarters of last year, Hyundai Kia Motors' performance showed significant fluctuations, described as going between cold and hot baths. Until the first half of the year, the rebound was driven by an improved sales mix focused on sport utility vehicles (SUVs) and favorable exchange rate effects, but in the third quarter, the performance faltered due to a one-time reflection of 900 billion KRW in recall-related provisions.

However, Hyundai Motor minimized the impact of one-time recall costs through the effect of no strikes last year and increased sales of key domestic models such as the Palisade and K5. In the fourth quarter, operating profits are expected to reach the securities consensus level (Hyundai Motor 1.0746 trillion KRW, Kia Motors 566.4 billion KRW), reflecting Kia Motors' partial strike and Hyundai Motor's 2019 wage and collective bargaining settlement costs (120 billion KRW).

Hyundai Motor Group's luxury brand Genesis has officially launched its first SUV (Sport Utility Vehicle), the 'GV80'. On the 15th, Hyundai Motor Group held a new car launch event at KINTEX in Goyang, Gyeonggi Province, and began official sales. The GV80 is Genesis's first rear-wheel-drive based large SUV.
Goyang ? Photo by Kim Hyun-min kimhyun81@

This year, Hyundai Kia Motors plans to stabilize its performance rebound with an aggressive new car strategy, starting production of three completely redesigned models in the first quarter alone. Following the Genesis brand's first SUV, the GV80, which kicked off the new car launches this year, production of key models from each brand, including the Genesis G80, Kia Sorento, and Hyundai Avante, will begin next month.

According to industry sources, Hyundai Motor will start mass production of the third-generation new Genesis G80 at the Ulsan Plant 5 from February, while Kia Motors will begin production of the completely redesigned (full change) Sorento at Hwaseong Plant 1. From March, the seventh-generation new Avante will be introduced on the Hyundai Motor Ulsan Plant 3 line.

These models are particularly significant as they rank among the top-selling models of each brand. The G80 will be introduced to the domestic market after a complete redesign for the first time in seven years since the launch of the Genesis DH in 2013. Until 2018, the G80 accounted for more than half of Genesis sales, securing a strong position within the brand. Compared to the mid-size sedan G70 and the G90, which has high corporate demand, the G80 has a broader customer base, and this new model launch is expected to reestablish it as the flagship model of Genesis. The Genesis G80 is scheduled to start with 2,500 units in February, with about 5,000 units produced monthly, including domestic sales and North American exports.

Hyundai Motor and Kia Motors will also start production of new models consecutively. The completely redesigned new Sorento, the first in five years, promises major changes in design, platform, and powertrain. Kia Motors plans to produce about 10,000 units of the fourth-generation Sorento monthly, including hybrid models. The Avante, which underwent a partial facelift in September 2018, will release a new model quickly after about one year and three months. The Avante will have 3,900 units produced at Hyundai Motor Ulsan Plant 3 in March, with monthly production exceeding 7,000 units starting in April.

Nam Jeongmi, a researcher at Yuanta Securities, analyzed, "Although external factors such as the won's appreciation and global automobile demand are negative this year, performance is expected to improve due to the improved sales mix centered on SUVs and Genesis new models, and the increased ratio of parts commonality. In particular, new models in the upper segment centered on the Genesis brand will lead to an increase in sales prices."

This content was produced with the assistance of AI translation services.