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Key takeaways

  • Hyundai's operating profit for the third quarter fell 6.5 percent year on year to 3.58 trillion won.
  • The company attributed the decline to a one-time contingent liability expense of 320 billion won and additional operating expenses of 400 billion won.
  • Nevertheless, Hyundai posted record third-quarter sales of 42.93 trillion won.

Hyundai Motor' s third-quarter operating profit came in lower than expected at 3.58 trillion won (2.392 billion euros). This figure represents a 6.5 percent year-on-year decline and fell short of market expectations of 3.87 trillion won (2.598 billion euros).

The company attributes this decline to several factors. A preventive warranty extension program for the Lambda II engine used in certain Grand Santa Fe and Santa Fe XL SUV models resulted in a one-time contingent liability of 320 billion won (214 million euros). In addition, the conclusion of collective wage negotiations in July resulted in an additional 400 billion won (268 million euros) in additional operating costs. Hyundai stressed that this warranty extension is not a recall, but a response to the "characteristics of American customers" who often carry heavy loads with their SUVs, which places additional stress on the engine.

Key Performance Indicators

Despite these challenges, Hyundai posted sales of 42.93 trillion won (28.86 billion euros) in the quarter, the highest ever for the third quarter in the company's history. However, net profit fell 3 percent to 3.21 trillion won (2.14 billion euros). A total of 1.01 million vehicles were sold during the period, down 3.2 percent from the previous year.

While the domestic market saw a modest growth of 1.8 percent in vehicle sales, both the European and Chinese markets saw a decline of 4.2 percent. In contrast, the North American market saw a remarkable 9.3 percent increase thanks to the popularity of the new Santa Fe SUV and the facelifted Tucson model.

Market trends

Hyundai's commitment to clean energy vehicles is evidenced by the 19.5 percent year-on-year increase in sales of hybrid, plug-in hybrid, electric and hydrogen fuel cell electric vehicles to 201,849 units. Although electric vehicle sales declined slightly from 66,000 last year to 61,000 this year due to global demand fluctuations, a strong increase in hybrid vehicle sales contributed to the overall growth in green vehicle sales. Hybrid vehicles now account for 13 percent of Hyundai's total sales, with a remarkable increase of 4.5 percent year-on-year.

Looking ahead, Hyundai expects continued growth in hybrid sales in the fourth quarter. The company is actively increasing production capacity at its Metaplant America facility, which began test production on Oct. 3. Price reductions for Ioniq 5 EVs produced at this plant are currently under consideration.

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