Hyundai Motor, Kia closely catching up to Toyota in operating profit

Hyundai Motor Co. and Kia Corp. buildings in Seoul [Courtesy of Hyundai Motor Group]

Hyundai Motor Co. and Kia Corp., South Korea’s two leading automakers under Hyundai Motor Group, are estimated to have posted more than a 30 percent increase in their first-quarter operating profit from a year ago, outpacing growth of other major global automakers such as Volkswagen AG, Toyota Motor Corp. and General Motors Co.

When only considering the estimated first-quarter operating profit for this year, their combined performance is expected to be slightly lower than Toyota and surpass GM by a large margin.

Despite concerns that performance could decline in the second half of this year due to an economic downturn, the automakers’ swift transition to electric cars and their supply chain management capabilities have been positively evaluated.

According to FnGuide on Monday, the market’s consensus for Hyundai Motor’s first-quarter operating profit this year is 2.66 trillion won ($2.02 billion), up 38 percent from the same period last year. The corresponding figure for Kia is 2.17 trillion won, up 34 percent from a year ago. This is a solid performance compared with major global automakers such as Volkswagen, Toyota, and GM.

According to NH Investment & Securities Co., Toyota is expected to record an operating profit of 509.4 billion yen ($3.84 billion) for the first quarter of this year. This figure represents a 9.8 percent increase, compared with 463.8 billion yen a year ago. Volkswagen’s operating profit is expected to fall 40 percent to 5.07 million euros from 8.32 billion euros for the same period. GM’s operating profit is expected to increase by 40 percent to $3.11 billion from $2.2 billion.

Industry experts attribute the differences in performance trends between Korean and global automakers to the different approaches taken in response to the transition to electric cars and supply chain constraints after the pandemic.

The reason why the performance of Hyundai Motor and Kia is different from that of global automakers is that the two Korean brands are faster in transitioning to electric cars, a business source said, adding that based on the EV dedicated platform for electric car development, they have continuously released cars such as the Ioniq 5, Ioniq 6, EV6 and EV9.

In addition, global automakers have experienced a common post-pandemic supply chain disruption and shortage of automotive semiconductors, which has led to a decline in both production and sales, but Hyundai and Kia have responded relatively quickly. Moreover, the two Korean carmakers have been able to capitalize on the growing global demand for eco-friendly cars with award-winning design and functionality.