Hyundai, South Korea’s largest automaker, the world’s fifth biggest when counted with affiliate Kia, has announced its net profit during the third quarter of the year dropped 23 percent year over year.
The earnings have fallen below analyst expectations, with the South Korean carmaker bullied by the slowing Chinese deliveries and aggressive discounting moves. According to the company, July-September net profit fell to 1.2 trillion won ($1.1 billion) from 1.5 trillion won during the same period last year. The sales have been lackluster in two of its major markets: China and the United States – with the results counting as the seventh consecutive quarterly profit regression. In China, the world’s largest auto market, both Hyundai and Kia had to resort to large incentives on its sport utility vehicles as the market has slowed sharply. Competition is also higher today because of adverse currency moves. “During the third quarter, Japanese companies utilized the weak yen to focus marketing in the U.S. market. We increased (sales) incentives in response,” commented chief financial officer Lee Won-hee during a conference call to announce the results.
Lee added they forecast a return to better results in China during the fourth quarter thanks to new model introductions but he also added that currency effects in emerging markets as well as in Europe managed to completely wipe the benefit of the weaker won versus the US dollar. He added the fourth quarter should deliver a better result once the new models come into play and also thanks to tax reductions in South Korea and China, as well as the benefit of having the local currency weaker than the US dollar.