Kia Surpasses Hyundai in April Domestic Sales... "Kia Now the Top Pick" [Weekend Money]

First Time Since the 1998 Group Integration

Korea Investment & Securities announced on May 9 that it is changing its top pick in the automotive sector from Hyundai Motor to Kia. The firm believes that Kia has more upside potential remaining in its stock price. Hyundai Mobis, which was previously presented as a top pick alongside Hyundai Motor, will continue to be maintained as a top pick.

Changho Kim and Yuna Jeon, researchers at Korea Investment & Securities, stated, "While Hyundai Motor's future transformation strategies such as its new robotics business and Software-Defined Vehicle (SDV) initiatives are positive, the stock remains overvalued compared to Kia even after factoring these in. Hyundai Motor's target price is 630,000 won, implying 17% upside potential, whereas Kia's target price is 220,000 won, with 43% upside potential."

Last month, Hyundai Motor sold 326,000 units, which represents an 8% decrease year-on-year and a 9.5% decrease month-on-month. This was attributed to several factors: weakened consumer sentiment due to the expansion of risks from the Middle East war and a sharp rise in oil prices, and production disruptions caused by a fire at Daejeon Safety Industry, a parts supplier for Hyundai Motor.

As a result, Kia's relatively robust performance stands out. Kia's sales volume reached 277,000 units, marking a 1% increase year-on-year but a 3.2% decrease month-on-month. In the domestic market, Kia sold 55,045 units (up 7.9% year-on-year) while Hyundai Motor recorded 44,051 units (down 19.9% year-on-year).

Changho Kim and Yuna Jeon noted, "This is the first time since the 1998 integration of Hyundai Motor Group that Hyundai Motor's monthly domestic sales have lagged behind Kia's. The sluggish domestic sales of Hyundai Motor are largely due to the Palisade recall and a sharp decline in Genesis sales, with the shortage of engine valves having a greater impact on Genesis and hybrid models."

Korea Investment & Securities also emphasized attention to Kia's pace in transitioning to electric vehicles (EVs). With high oil prices likely to drive a short-term increase in EV sales from the second half of the year, the firm forecasts that over the longer term, economies of scale will lead to cost reductions and the proliferation of mass-market models. In particular, Kia is expected to benefit more as EV demand grows, given its strong lineup of mid- to low-priced models (EV2 to EV5).

In the U.S. market, both Hyundai Motor and Kia are seen as being in advantageous positions. Last month, U.S. sales for Hyundai Motor and Kia dropped by 1.5% and 2.8%, respectively, but their market shares increased by 0.3 percentage points and 0.1 percentage points. Changho Kim and Yuna Jeon predicted, "With their sedan and mid- to low-priced lineups, both companies are best equipped to counter consumer price resistance, and their hybrid offerings help them respond to high oil prices. Therefore, the trend of expanding market share in the U.S. is expected to continue."

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