Improved Sales Mix and Exchange Rate Effects... New Car Momentum Valid
50,000 Palisade Units Sold Domestically... Annual SUV Share 40.5%
Genesis GV70 Launching This Second Half... Brand Annual Sales Target 116,000 Units
[Asia Economy Reporter Su-yeon Woo] Hyundai Motor Company achieved its first-ever sales revenue exceeding 100 trillion KRW, driven by an improved mix focused on sport utility vehicles (SUVs) and favorable exchange rate effects. This year, Hyundai plans to continue its momentum of performance improvement through new model effects, strengthened profit and loss management by region, and enhanced profitability through parts commonization.
On the 22nd, Hyundai held its 2019 annual business performance conference call at its headquarters in Yangjae-dong, Seoul, announcing annual sales of 4,425,528 units, sales revenue of 105.79 trillion KRW, and operating profit of 3.68 trillion KRW for 2019.
This is the first time in Hyundai’s history that sales revenue has surpassed 100 trillion KRW, with sales revenue increasing by 9.3% and operating profit soaring by 52.1% compared to the previous year. The operating profit margin, which had fallen to 2.5% last year, rose to 3.5%. Hyundai’s operating profit margin target for 2020 is 5%.
Additionally, the annual operating profit, which had dropped to the 2 trillion KRW range in 2018, recovered to 3.68 trillion KRW this year. This rebound in Hyundai’s operating profit compared to the previous year is the first in seven years since 2012.
Despite large one-time costs related to recalls in the third quarter of last year, the improved sales mix of SUVs and luxury models (1.404 trillion KRW) offset these costs, and a positive exchange rate effect (987 billion KRW) also contributed. The SUV share of annual sales last year rose to 40.5%.
Hyundai Motor Company 2019 Annual Performance (Unit: Units, 100 Million KRW) / Source: Hyundai Motor Company
◆ Sales target of 4,576,000 units this year... Genesis 116,000 units = Hyundai set its sales target for this year at 4,576,000 units, a 3.4% increase from the previous year. Domestic sales were conservatively estimated at 732,000 units, considering last year’s strong sales of the Palisade. Overseas sales target was set at 3,844,000 units, a 4.4% increase from the previous year, driven by increased sales in emerging markets such as India and Latin America.
To achieve this, Hyundai plans to further strengthen sales momentum through the successful market entry of the GV80 launched last week and the full-change model launches of volume models such as the Avante and Tucson. It will also focus on efficient incentive strategies tailored to regional characteristics and improving profitability of eco-friendly vehicles through parts commonization.
Furthermore, Hyundai aims to make this year the first year of securing leadership in future markets by strengthening capabilities in future technologies such as electrification, autonomous driving, and mobility services. It plans to accelerate its transformation into a smart mobility solutions provider and actively expand investments to build a new mobility ecosystem.
The Genesis brand announced an annual sales target of 116,000 units this year, marking the first time since the brand’s launch that it has set a target exceeding 100,000 units. The launch of Genesis’s second SUV, the GV70, is scheduled for the second half of this year, with the first Genesis electric vehicle expected next year. Lee Yong-woo, Vice President and Head of Genesis Division, said, “We set aggressive sales targets because we believe SUVs such as the GV80, launched earlier this year, and the GV70, scheduled for release in the second half, have market competitiveness. We are working to capture the optimal timing ahead of launches in Europe and China this year.”
◆ Despite decreased sales in Q4 last year, revenue and profit increased = Hyundai announced that its Q4 performance last year included global sales of 1,195,859 units, sales revenue of 27.87 trillion KRW, operating profit of 1.24 trillion KRW, and net profit of 851.2 billion KRW. While sales decreased by 2.5% compared to the previous year, sales revenue and operating profit increased by 10.5% and 148.2%, respectively.
A Hyundai official explained, “Sales declined in Q4 last year due to weakened demand in major markets and sluggish sales of some aging models. Nevertheless, strong sales of new models such as the Palisade and The New Grandeur, continued improvement in product mix due to increased SUV sales, reduced incentives, and exchange rate effects significantly enhanced profitability.”
Of the Q4 operating profit (1.244 trillion KRW), 318 billion KRW came from mix improvement effects and 352 billion KRW from exchange rate impacts, accounting for a substantial portion. The SUV share of vehicle sales in Q4 was 41.9%, up 4.9 percentage points from the same period last year.
Hyundai’s popular model Palisade surpassed 50,000 units in annual domestic sales and recorded nearly 30,000 units sold in the U.S. market. In the European market, the small SUV Kona sold 27,308 units in Q4 alone, achieving a growth rate exceeding 40% compared to the previous year.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
