The largest automaker in South Korea recently reported second-quarter earnings that failed to meet expectations, as the company’s export profits were eaten away by the rising local currency.
With a miss that saw its net profit go down the most in five quarters, South Korea’s Hyundai Motor is now mulling an extension of its overseas car production, as the prospects for the second half of the year are equally gloomy, because of the won’s continued strength.
“We do not have a positive outlook for the exchange rate in the second half,” Chief Financial Officer Lee Won-hee said in a conference call. “We plan to expand capacity continuously in markets where there is demand,” he added.
The decision to increase the overseas manufacturing base would come in stark contrast to the automaker’s stance in the past years, when the company avoided building additional new factories outside its South Korean home base.
Hyundai’s deliveries in its home market were up 8%, buoyed by the launch of the refreshed Genesis and Sonata sedans. In China, the automaker posted even better results, with sales up 11%, driven by increased local production. Meanwhile, the outlook in the US was not that great, as the 4% advance in the second-quarter sales was behind the overall market’s 7% growth.