Why Hyundai Motor and Kia Are Expected to Achieve Record Profits Despite Lower Sales

6.85 Million Units Sold Last Year... Fell Short of 7.25 Million in 2019
Exchange Rate Rise and Overseas Sales Recovery Drive Performance

[Asia Economy Reporter Yoo Hyun-seok] Despite last year's economic downturn and the shortage of automotive semiconductors, Hyundai Motor Company and Kia are expected to record strong performance. This was driven by increased overseas sales and favorable exchange rate effects.

On the 18th, securities firms projected that the combined sales and operating profit of Hyundai Motor and Kia for last year would be KRW 228.8706 trillion and KRW 16.3603 trillion, respectively.

Specifically, Hyundai Motor is expected to record sales of KRW 141.9898 trillion and operating profit of KRW 9.449 trillion, representing a 20.73% increase in sales and a 41.47% increase in operating profit compared to the previous year. Kia is expected to achieve sales of KRW 86.8808 trillion and operating profit of KRW 6.9113 trillion, up 24.36% and 36.43%, respectively, from the previous year.

Both Hyundai Motor and Kia achieved record-high results. These results were achieved despite not fully recovering production volume. Last year, Hyundai Motor and Kia sold 3,944,579 units and 2,936,619 units, respectively, totaling 6,848,198 units.

This figure falls short of the annual 7 million units recorded in 2019. In 2019, before the COVID-19 pandemic, Hyundai Motor and Kia sold 4,425,528 units and 2,821,175 units, respectively, totaling 7,246,703 units. However, due to the shortage of automotive semiconductors, sales dropped sharply to 6,351,569 units in 2020. Although sales increased in 2021, they only reached 6,667,085 units.

Nevertheless, the improvement in performance was due to a favorable exchange rate and a mix improvement resulting from increased sales of sport utility vehicles (SUVs) and the premium brand Genesis.

The average exchange rate last year was KRW 1,292.2, the highest in 24 years since 1998 (KRW 1,395.0). Notably, it rose to KRW 1,444.2 during trading on October 25, the highest since March 16, 2009 (KRW 1,488). Since Hyundai Motor and Kia have a high proportion of overseas sales, they benefited from the rising exchange rate.

Additionally, sales are recovering in the U.S., Europe, and emerging markets. In the U.S., 1,474,224 units were sold last year, marking the second-highest sales volume following 2021. Among these, SUVs, considered high value-added vehicles, ranked at the top of Hyundai Motor and Kia sales. The best-selling model for Hyundai Motor was the Tucson (175,307 units), and for Kia, it was the Sportage (125,245 units). Especially, Genesis sales increased by 13.7% year-on-year to 56,410 units. In Europe, 1,060,989 units were sold last year, a 4.2% growth compared to the previous year, achieving the second-highest annual sales since 2019. The Tucson (120,946 units) and Sportage (140,327 units) were the best-selling models.

Hyundai Motor and Kia are expected to continue growing this year following last year. They set a sales target of 7,521,000 units, with Hyundai Motor aiming for 4,321,000 units and Kia for 3,200,000 units, representing increases of 9.5% and 10.2%, respectively, compared to the previous year. Researcher Lee Jae-il of Eugene Investment & Securities explained, "Despite concerns about demand slowdown due to interest rate hikes, they presented guidance for accelerated sales growth. Considering last year's low base caused by automotive semiconductor shortages, accumulated waiting demand, and new car competitiveness, the target is deemed achievable."

However, there are many threats. Along with the global economic downturn, high interest rates and high inflation may lead to reduced consumption, causing some consumers to forgo vehicle purchases.

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