Hyundai Motor and Kia Achieve Record High Performance, Aim for Profitability This Year (Comprehensive)

Last Year, Top 2 Listed Companies in Operating Profit
Increase in High-Value-Added and Eco-Friendly Vehicle Sales Share

Hyundai Motor and Kia, the two major domestic automakers, both posted record-high performances last year, ranking first and second in operating profit among listed companies in Korea. The combined operating profit of the two companies reached KRW 26.7348 trillion, an increase of more than 50% compared to the previous year (KRW 17.058 trillion), which was also a record high. Samsung Electronics, which had long held the top spot in operating profit among domestic listed companies, reported a provisional operating profit of KRW 6.54 trillion last year.

According to the management performance announced by the two companies on the 25th, Hyundai Motor recorded consolidated sales of KRW 162.6636 trillion and an operating profit of KRW 15.1269 trillion. This is the highest since the introduction of IFRS in 2010. The previous record was in 2022 (sales of KRW 142.1515 trillion and operating profit of KRW 9.8249 trillion), which was significantly surpassed. Last year was the first time Hyundai Motor's annual operating profit exceeded KRW 15 trillion. The operating profit margin was recorded at 9.3%.

Hyundai Motor Company building in Yangjae-dong, Seoul. Photo by Jinhyung Kang aymsdream@

Kia recorded sales of KRW 9.8084 trillion and an operating profit of KRW 11.6079 trillion last year, representing increases of approximately 15% and 61%, respectively, compared to the previous year. Kia achieved an operating profit of over KRW 2 trillion and a double-digit operating profit margin for five consecutive quarters. The annual operating profit margin last year was 11.6%, estimated to be among the top ranks globally among automakers. The combined sales of the two companies increased by 15%, and operating profit rose by nearly 57% compared to the previous year.

The strong performance was driven by an increase in sales volume along with a mix improvement, meaning higher sales of more expensive models. Sales increased mainly in eco-friendly vehicles such as electric and hybrid cars, as well as relatively expensive models like sport utility vehicles (SUVs) and recreational vehicles (RVs). Sales growth in advanced markets such as North America and Europe also contributed. Although somewhat eased in the second half, the year-round weakness of the Korean won positively impacted financial results.

Hyundai Motor's sales proportion of SUVs and the premium Genesis brand rose to 59.2%, up 2.4 percentage points from 56.8% a year earlier. Last year, sales of eco-friendly vehicles (hybrid, electric, plug-in hybrid, and hydrogen fuel cell) reached 695,000 units, an increase of nearly 200,000 units during the same period.

Kia also saw hybrid sales increase by more than 20% and plug-in hybrid sales rise by nearly 16% compared to a year earlier. Eco-friendly vehicles accounted for 19% of total new car sales. Eco-friendly vehicles are not only expensive themselves but also appear to contribute to company profits as economies of scale are gradually established.

Chairman Chung Euisun of Hyundai Motor Group [Photo by Hyundai Motor Group]

By raising their targets for this year, concerns about market peak-out have also been alleviated. Hyundai Motor set its annual sales target at 4.24 million units, a 0.6% increase, with an operating profit margin of 8.0?9.0%. Kia raised its sales target by 3.6% to 3.2 million units, and also increased its sales and operating profit targets by 1.3% and 3.4%, respectively. Despite challenging domestic and international economic conditions, the goal is to maintain profitability by increasing sales of high value-added vehicles.

Hyundai Motor stated, "We plan to focus on defending profitability by increasing sales of eco-friendly vehicles and raising the sales proportion of SUVs and high value-added models." Kia said, "A structurally virtuous profit cycle has been established, and by actively expanding the electric vehicle lineup, we will strengthen our leadership in the eco-friendly vehicle market and pursue sustainable growth."