Hyundai, Kia sales to remain on growth track next year despite downturn

Genesis G70 [Source : Hyundai Motor]

Despite challenges in the global automobile industry amid economic downturn, South Korea’s two leading auto brands Hyundai Motor Co. and Kia Corp. are expected to see their car sales next year grow on a recovery in output from easing hip shortages and still low auto demand below the pre-pandemic level.

Hyundai Motor’s operating profit for 2023 is forecast to increase by 7.53 percent on year to 10.05 trillion won ($7.73 billion) over sales of 148.77 trillion won, up 4.16 percent, according to analyst forecasts polled by FnGuide on Monday. Kia’s operating profit is projected to rise 12.44 percent on year to 7.75 trillion won over sales of 92.17 trillion won, up 5.6 percent.

They are also expected to report their best-ever results this year thanks to handsome foreign exchange gains from the strong U.S. dollar against the Korean currency won and increased sales of lucrative sport utility vehicles and upmarket Genesis brands’ cars that should more than offset their massive 2.9 trillion won loss reserves for engine defects.

Demand for high-end durable goods such as cars will decline globally due to concerns about the economic downturn next year, but global automobile sales are expected to remain on the recovery track until 2024 as chip supply shortages are due to ease and the overall global auto demand is still 15 percent below the pre-pandemic level, said Cho Soo-hong, an analyst at NH Investment & Securities.

According to a report released by the Korea Automobile Manufacturers Association (KAMA), domestic car sales are expected to grow 1.5 percent on year to 1.72 million units next year, despite contraction in overall spending due to economic recession and high interest rates.

Their car exports are also projected to grow by 3.1 percent to 2.35 million units in 2023. The implementation of the Inflation Reduction Act (IRA), which subsidizes electric vehicles assembled in the United States, is a setback for Korean EV exports.

However, in the European market, Hyundai and Kia’s EV sales are forecast to continue growing through next year, which should make up EV sales loss in the U.S. Kia sold 200,984 EVs in Europe for the first 10 months this year. Kia’s EV sales galloped from 63,419 units sold last year. Hyundai Motor’s EV sales in the region already surpassed 200,000 units in April.

Combined EV sales of Hyundai Motor and Kia stayed at the third largest of 9.8 percent in the European EV market as of October after beating Renault Group in the first half of this year.

Telluride [Source : Kia]

Kia is top pick in the auto sector by market analysts, with a target price consensus of 100,389 won for next year. Kia has become a recognized brand in the internal combustion engine sector with the success of its large SUV, Telluride, in the U.S., but its average selling price remains the lowest in the market and this will push up its sales, said Lim Eun-young, an analyst at Samsung Securities, adding that its EV sales in the U.S. are expected to increase from 780,000 units this year to 830,000 units next year and 920,000 units in 2025, along with the launch of the EV9 in April next year.