Automobile Stocks Hesitate Amid Strike Concerns... Restarting with Earnings and Industry Momentum

Hyundai Motor and Kia Aim for Rebound After Adjustment
Strike Concerns Emerge but Real Impact Expected to Be Minimal
"Strong 2Q Earnings Outlook Maintains Optimism for Electric Vehicle Market"

On the 1st, Ulsan Port can be seen beyond the export shipment dock and storage yard at Hyundai Motor Company's Ulsan plant, where finished vehicles are waiting. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The stock prices of leading domestic automobile stocks such as Hyundai Motor and Kia appear to be recovering from the bottom. Although there has been a recent downward trend due to concerns over labor union strikes, analysis suggests that earnings and industry conditions remain solid, providing sufficient momentum for an increase.

As of 9:04 a.m. on the 13th, Hyundai Motor's stock price rose 0.65% from the previous day to 231,500 KRW. Following a 1.77% increase the day before, marking the first rise since the beginning of the month, it is attempting to stabilize in the 230,000 KRW range. Kia is showing a similar trend, recording 88,400 KRW, up 0.80% from the previous day in early trading. The day before, it closed up 1.98%, marking the largest gain this month.

Although strikes are negative factors, past experience shows their impact on stock prices has been limited. The Hyundai Motor labor union conducted strikes for eight consecutive years from 2011 to 2018, but the stock price fell during the strike periods (third quarter) only twice: in 2011 during the European economic crisis and in 2017 amid the controversy over the ordinary wage lawsuit. In 2012 (82,000 units) and 2016 (142,000 units), when production disruptions due to strikes were the largest, the stock price actually rose by 8.2% and 0.1%, respectively.

Since earnings and industry conditions are favorable, it is analyzed as a buying opportunity at low prices. According to financial information provider FnGuide, Hyundai Motor's market consensus for consolidated earnings in the second quarter of this year is sales of 29.009 trillion KRW and operating profit of 1.8807 trillion KRW, representing increases of 32.7% and 218.6% respectively compared to the same period last year. Kia is also expected to record sales of 17.8723 trillion KRW and operating profit of 1.3534 trillion KRW, up 57.2% and 832.1% respectively from the same period last year.

Song Seonjae, a researcher at Hana Financial Investment, stated, "With increased sales of electric vehicles such as the Hyundai Ioniq 5, which experienced production disruptions in the second half, and the Kia EV6 scheduled for release in the third quarter, a revaluation of corporate value aligned with the eco-friendly vehicle trend is expected. It is necessary to focus on the direction of strengthening future vehicle competitiveness rather than short-term production disruption factors such as labor union strikes."

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