Hyundai Motor to emerge as Korea’s highest earner, beating Samsung

Hyundai Motor Co. will likely emerge as South Korea’s top profit maker in the first quarter, driven by robust sales of pricey cars, pushing past the longest-reigning champion, Samsung Electronics Co.

In the January-March period, Hyundai, the country’s largest automaker, sold 1.02 million cars globally including Korea, up 13% from the year-earlier period, company data showed on Monday.

Its affiliate Kia Corp. sold 767,700 vehicles in the first quarter, up 12% from a year earlier.

In March alone, Hyundai sold 381,885 vehicles, driven by high-end sedans and pricey SUVs, up 21.3% from the same month a year ago. Domestic sales increased 40.9% while overseas sales rose 17.4%.

Kia, Korea’s second-largest automaker, said its March sales increased 10.9% year on year to 278,275 units on strong sales of its flagship SUVs such as the Sportage and Sorento. Domestic sales gained 17.8% while overseas sales rose 9.2%.

With the strong quarterly results, the two carmakers are on track to reach their annual global sales target of 4.32 million cars for Hyundai and 3.2 million units for Kia.

“With easing chip and other component shortages, we have sold more new models of the Grandeur sedan, the IONIQ 6 EV and the Kona crossover,” said a Hyundai official.

“We will continue to improve our product mix by launching a fully redesigned Santa Fe SUV and our first high-performance IONIQ N electric car.”

HYUNDAI, KIA AHEAD OF SAMSUNG

Analysts said Hyundai Motor is expected to post its highest-ever quarterly profit for the January-March period, above Samsung Electronics, which boasts Korea’s largest market capitalization.

According to market tracker FnGuide, Hyundai Motor is forecast to post 2.56 trillion won ($1.95 billion) in operating profit in the first quarter, up 24.7% from a year earlier. That would be the carmaker’s best first-quarter performance since it adopted the International Financial Reporting Standards (IFRS) in 2010.

Kia is forecast to post a quarterly operating profit of 2.06 trillion won, up 28.1% from the year-earlier period. With that figure, the carmaker would post its highest profit for the first quarter.

If realized, both Hyundai Motor and Kia, for the first time, would beat Samsung, which is widely expected to post a first-quarter operating profit to the tune of 1 trillion won, weighed down by weak chip sales.

Encouraged by the stellar first-quarter car sales figures, the two car-making units of Hyundai Motor Group could each raise their full-year sales goals and earnings guidance when they announce quarterly results later this month, analysts said.

Earlier this year, Hyundai Motor and Kia said they aim to achieve 11.92 trillion won and 9.3 trillion won in operating profit for 2023, respectively.

IRA REMAINS MAJOR CONCERN

Industry watchers said the US Inflation Reduction Act, which excludes electric vehicles built outside North America from tax credits, remains a major concern for Hyundai and Kia for the rest of the year.

According to the latest guidelines announced by the US Treasury Department, to be eligible for a $7,500 credit, clean vehicles must meet sourcing requirements for both the critical minerals and battery components contained in the vehicle. Vehicles that meet one of the two requirements are eligible for a $3,750 credit.

Vehicles placed in service on or after April 18 will be subject to the critical mineral and battery component requirements laid out in the rule.

Hyundai and Kia plan to bring forward the production of electric cars at their respective US factories in Alabama and Georgia as well as increase sales of commercial EVs and vehicles on lease, which don’t have to meet the requirement of final assembly in North America.

In January, Hyundai Motor said it would spend 10.5 trillion won this year to ramp up facilities for electric cars and other eco-friendly vehicles after it posted record revenue and operating profit last year.

Write to Il-Gue Kim, Nan-Sae Bin and Sungsu Bae at Black0419@hankyung.com

In-Soo Nam edited this article.