Hyundai Motor Group, other global automakers seek to expand in China’s EV market

Volkswagen Group logo [Photo by MK DB]

Global automakers are struggling to solidify their presence in China, the world’s largest automobile market, as local peers emerge as strong players in the intensifying electric vehicle (EV) scene.

According to an analysis by Maeil Business Newspaper on Wednesday, German carmaker Volkswagen Group posted the highest first-quarter operating profit of 7.8 trillion won ($5.9 billion) among the global automakers.

Volkswagen Group was followed by Mercedes-Benz Group AG with 7.6 trillion won, BMW Group with 7.27 trillion, and Hyundai Motor Group (HMG) with 6.46 trillion won. Stellantis N.V. was not included in the analysis as they didn’t report their operating profit.

The first-quarter operating profit of Volkswagen slipped by 31 percent compared with the year ago. However, the earnings were a 35 percent increase when adjusted for negative evaluations of raw materials hedging, according to the company.

BMW Group reported improved operating profit for the quarter thanks to stronger sales of premium models despite a slight fall in overall sales in the period.

Hyundai Motor Group’s improved operating profit came from its strategy on premium models. The Korean automaker raised the average price per unit by unveiling more lineups of high-end models and adding a range of features to every premium model as primary options.

In addition to the strategy, the Korean carmaker expanded its portfolio of sport utility vehicles (SUVs), more profitable than sedans, to target major markets, including the U.S.

In the first quarter, Hyundai Motor Group posted 10.5 percent in operating profit margin to become one of the global automakers with double-digit profit margins, like Mercedes-Benz and Tesla Inc.

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

However, global automakers have shown sluggish first-quarter performance in China, as local Chinese rivals have eaten their market share on the back of the government’s push for rapid automobile electrification.

China’s rapid advance pushed U.S. auto giant General Motors Co. (GM) to No. 6 from No. 3 a year ago in terms of operating profit.

The U.S. automaker sold 1.38 million units globally, down 3 percent from a year earlier. Its domestic sales climbed 18 percent over the past year, but its Chinese sales plunged 25 percent.

Japan’s Toyota Motor Corp. has not revealed its performance in China but it is losing its leading position to China’s electric vehicle maker BYD Auto Co.

As the largest EV automaker in China, BYD posted 22.4 trillion won in sales, up 77 percent from a year ago. Its operating profit soared 391 percent to 989.4 billion won.

Hyundai Motor Group, which failed to position its brand in China earlier, is seeking to advance into the market again because it believes the world’s largest automotive market has growth potential for EVs.

Korea’s second-largest automaker Kia Corp. aims to raise its sales in China by 92 percent to 170,000 units this year from 89,000 units last year.

Hyundai Motor Co. also plans to increase its sales in China by 21 percent, from about 254,000 units last year to 306,000 units this year.

Kia plans to unveil EV6 this year as part of its efforts to expand EV lineups. Hyundai Motor will appeal to Chinese consumers with its high-performance N brand and locally targeted models.