HMMI turns profitable in second year of operation

Hyundai Motor‘s plant in Indonesia. [Courtesy of Hyundai Motor Co.]

Hyundai Motor Manufacturing Indonesia (HMMI) achieved profitability in its second year of operation after it was founded in March 2022, with the plant has successfully completing initial operational tasks, including enhancing production stability and efficiency.

According to a recent report that Hyundai Motors Co. submitted to the Financial Supervisory Service (FSS), HMMI‘s sales surged by 29.9 percent from 1.48 trillion won ($1.12 billion) in 2022 to 1.92 trillion the year after. During the same period, the plant’s net profit turned surplus to 81.7 billion won from a deficit of 36.4 billion.

The plant struggled to optimize production lines and maintain quality control during the initial phase of its operation. With these challenges, its fixed costs, such as labor and depreciation, weighed on the company‘s financial performance, which explains the lower utilization rates and deficits over the past two years.

With a series of efforts made by the company, however, its utilization rate rose from 50.3 percent at the end of March 2023 to 66.1 percent by the end of September of that year. The rate is projected to go beyond 70 percent by the end of 2024.

[Graphics by Song Ji-yoon and Han Yubin]

For its part, Kia Corp., another major player within the Hyundai Motor Group, announced a significant increase in capital investment in 2024 to diversify its vehicle offerings as well as expand its facilities both in Korea and overseas.

This expansion strategy, amid ongoing global economic uncertainties, underscores Kia’s commitment to growth and innovation. The company will invest in new product lines, expand plants, and make other improvements that are necessary to raise operation rates and product quality.

The automaker is set to invest 470.5 billion won in the United States, a 2.4-fold increase from its spending in 2023.

Hyundai Motor Group Metaplant America, Hyundai Motor Group’s first electric vehicle-only manufacturing plant, is expected to begin operations later in 2024.