Hyundai Motor, Kia to extend earnings rally in 2024 with diversified hybrid, EV lineups

 Two carmakers post record-high operating profits in 2023

By Lee Min-hyung, The Korea Times - Hyundai Motor and Kia will focus on diversifying their lineups of hybrid and electric vehicles (EV), as part of their key management strategy for 2024, the nation’s two leading automakers said in a regulatory filing on Thursday, after releasing stellar earnings results.

Both automakers surprised investors with drastic profit growth last year. They placed their names on the first and second-most profitable firms in terms of operating profit in 2023, respectively, overtaking Samsung Electronics for the first time 14 years.

Hyundai Motor said it will carry out a two-track growth strategy by improving the product mix of its value-added SUV and luxury vehicles and expanding lineups for eco-friendly cars to repeat its winning streak in earnings this year.

According to the regulatory filing, the nation’s leading automaker generated a record annual operating profit of 15.12 trillion won ($11.3 billion) in 2023, up 54 percent from a year ago, buoyed by its overall auto sales growth and improved profitability from sales of value-added vehicles. The automaker also set a history by reporting sales of 162.66 trillion won, up 14.4 percent, during the same period.

Hyundai Motor plans to continue raising the global brand identity of its flagship IONIQ EV lineup and expanding its hybrid models, with a view to attracting growing demand for eco-friendly vehicles here and abroad, the company said. The automaker will also keep improving profitability by enhancing the market share for its flagship SUVs, such as Tucson, and luxury vehicles sold by its premium brand, Genesis.

“We will keep up the growth momentum this year by improving the product mix and driving innovation in production costs, despite lingering external uncertainties triggered by volatile exchange rates, high interest rates and global economic slowdown,” Koo Za-yong, senior vice president and head of investor relations at Hyundai Motor, told investors during a conference call.

The automaker also shared plans to expand investments by 3.3 percent this year to 12.4 trillion won to speed up its transition into a software-defined vehicle (SDV) manufacturer.

Kia, another auto affiliate of Hyundai Motor Group, also impressed investors with drastic earnings growth. According to its regulatory filing on the same day, the company reported an operating profit of 11.6 trillion won last year, up 60.5 percent from the previous year. Its sales also jumped by 15.3 percent to 99.8 trillion won during the same period.

The automaker also placed its top management focus on strengthening its hybrid and EV lineups.

Sales of eco-friendly cars accounted for 19.9 percent out of the total during the fourth quarter of last year, up 2.9 percentage point from a year earlier. This was driven by robust sales of its key hybrid lineups, such as Sorento and Sportage.

Joo Woo-jeong, executive vice president and chief financial officer at Kia, expressed rosy outlook for the hybrid vehicle market.

“We have completed hybridization of our mainstream auto lineups, and will continue to turn the remaining models – such as Seltos – into ones powered by hybrid electric vehicles (HEV),” Joo told investors during the conference call. “Demand for HEVs surpass its supply, so we are making multifarious efforts to satisfy the demand. Hybrid vehicles were once considered ones deteriorating automakers’ profitability, but this is not the case anymore. They contribute a lot to enhancing our profitability and raising the overall market share.”

Kia also plans to strengthen its footing in the global EV industry with plans to launch cheaper lineups this year. The automaker is scheduled to launch price-competitive compact EV3 in June. Sales for its EV9 flagship SUV will be in full swing in North America in 2024, so the automaker expected its EV sales this year to rise by 50 percent from the previous year.

For this year, the automaker shared its aggressive earnings vision of attaining 1 trillion won in monthly operating profit by pushing ahead with the two-track growth strategy focusing on HEVs and EVs. It also expected its total auto sales to jump by 3.6 percent in 2024 to 3.2 million.

Source: https://www.koreatimes.co.kr/www/tech/2024/01/419_367627.html 

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