Hyundai Motor posts record operating profit for three consecutive quarters in Q2

Hyundai Motor Co.’s Genesis GV80. [Courtesy of Hyundai Motor]

South Korea’s auto giant Hyundai Motor Co. on Wednesday posted record quarterly sales and operating profit in the second quarter, driven by robust sales of premium models such as the Genesis sedan. At the same time, the company also achieved its first quarterly sales of 40 trillion won ($31.43 billion) and an operating profit margin of 10 percent.

“Hyundai Motor is profitable because we are selling more high-value vehicles such as Genesis, sport utility vehicles (SUVs), and eco-friendly cars, not just because the global market is good,” said Seo Gang-hyun, executive vice president of Hyundai Motor’s planning and finance division, during the announcement of the company’s preliminary results for the second quarter on Wednesday. “Even if the market slows down in the second half, we will not focus on selling low-margin vehicles.”

Hyundai Motor announced that its second-quarter sales and operating profit reached 42.25 trillion won and 4.24 trillion won, respectively. The consensus for Hyundai Motor’s second-quarter sales and operating profit were 40.53 trillion won and 3.89 trillion won, respectively, according to financial data tracker FnGuide Inc.

Hyundai Motor also raised its full-year earnings estimates along with the release of its second-quarter results. In the past two years, the company made the adjustment during its third-quarter earnings report, but this year the company moved it up by three months. Earlier this year, the auto giant had expected annual sales growth of 10.5~11.5 percent, which it raised to 14~15 percent. Additionally, the annual operating profit margin, initially set at 6.5~7.5 percent, has also been raised to 8~9 percent. Another surprising point is that Hyundai Motor’s operating profit margin reached 10 percent in the second quarter, surpassing 9.6 percent of Tesla Inc., the epitome of electric vehicles.

The basis of Hyundai Motor’s confidence lies in the sales volume. In the second quarter, the company’s global sales volume rose by 8.5 percent to 1.06 million units compared to the same period last year. In particular, the share of high-end cars in the sales volume is increasing, driving up profitability. Hyundai Motor’s luxury brand Genesis accounted for 5.9 percent of total sales, up 0.5 percentage points from a year ago. SUVs are also performing well, including the all-new Kona, which has entered global sales, and the Santa Fe and Tucson. SUVs also include the Genesis GV70 and GV80, which are gaining popularity in South Korea and North America.

The expansion of electric vehicles (EVs) and hybrid electric vehicles (HEVs) is particularly rapid. EVs increased by 1.9 percentage points from a year ago, reaching 7.4 percent, while HEVs saw a 3 percentage point increase, reaching 9.1 percent. Most notably, in the U.S., where subsidies are no longer available due to the implementation of the Inflation Reduction Act (IRA), Hyundai Motor’s EV sales surged 134 percent, driven by increased commercial sales of the Ioniq 6 and leases and rentals.

The performance in key markets is also strong. In South Korea, the company saw sales of the all-new Grandeur, launched late last year, and the all-new Kona, which debuted in the first quarter, increase 12.7 percent to 205,053 units compared to the same period last year. In the U.S., sales rose by 11.7 percent, and in Europe, gained by 9.5 percent, driven by good performances of the Ioniq 6 and Kona Hybrid.

In China, where the company adopted a strategy of “select and focus” through factory sales and lineup reduction, sales rose by 61.8 percent to 60,000 units. However, sales in Russia fell by 35.9 percent to 13,000 units from 20,000. Hyundai Motor also expected a positive performance for the second half of the year.

Meanwhile, shares of Hyundai Motor closed down 0.9 percent at 197,700 won on the main Kospi on Wednesday from the previous day. The company declared a second-quarter dividend of 1,500 won per common share.