* Hyundai Motor expects chip supply to improve gradually
* Company expects chip supply to normalize in Q3
SEOUL, Jan 25 (Reuters) - South Korea's Hyundai Motor Co
forecast on Tuesday its vehicle production would
rebound in the first half of this year as a global chip shortage
is expected to ease gradually from the second quarter.
"The normalization of auto chip supply and demand is
expected in the third quarter, when the capacity of
semiconductor companies is expected to rise," Executive Vice
President Seo Gang Hyun said on Hyundai's conference call.
The shortage will continue in the first quarter due to the
spread of the Omicron variant, Seo said, adding it was the
prolonged COVID-19 pandemic in Southeast Asia and resulting chip
sourcing troubles that pushed Hyundai's sales to less than the
targeted 4 million vehicles in 2021.
Southeast Asia is central to the supply of basic chips that
drive the world's cars, smartphones and home devices, with
Malaysia's chip assembly industry accounting for more than a
tenth of a global trade worth over $200 billion. COVID-related
lockdowns in the region have disrupted several industries since
Hyundai said it expects a 20% sales jump in its biggest
market, North America, in 2022.
Hyundai and its affiliate Kia Corp, together
among the world's top 10 automakers by sales, have forecast a
12.1% jump in their combined global sales for 2022, after their
sales fell almost 4% short of a target of 6.92 million vehicles
last year due to the chip shortages.
Hyundai posted a nearly 50% drop in its profit for the
quarter ended December, significantly short of analysts'
estimate, mainly due to the payment of corporate taxes.
It reported a net profit of 547 billion won ($456 million),
versus 1.1 trillion won a year earlier. That compared with an
average analyst forecast of 1.5 trillion won compiled by
HIGHER PRICES, OMICRON
Analysts warn that soaring raw material prices, component
shortages and logistical bottlenecks caused by the pandemic are
likely to further drive up costs in the current quarter.
"It is still difficult to forecast how the chip shortage
will pan out ... also there will be other uncertainties
involving the spread of the Omicron variant and potential issues
related to Ukraine tensions," said Lee Jae-il, an analyst at
Eugene Investment & Securities.
Japanese automakers Toyota Motor Corp and Honda
Motor Co Ltd have said they plan to curb their
production this month due to rising COVID cases and part supply
As supply chain and distribution disruptions continue,
delaying deliveries and production, analysts expect Hyundai to
raise vehicle prices to mitigate the impact.
Major automakers and dealers, such as Tesla Inc and
Honda Motor Company, have already raised car prices https://www.reuters.com/world/the-great-reboot/inflation-risk-or-profit-engine-high-car-prices-are-both-2021-08-10
over the past year.
Shares in Hyundai Motor fell 1.5% as of 0616 GMT, versus the
benchmark KOSPI's 2.7% fall.
($1 = 1,198.7100 won)
(Reporting by Heekyong Yang and Joyce Lee; Editing by Himani