Hyundai Motor and Kia Aim for Global 2nd Place in Cars... Surpass Volkswagen in Operating Profit

Hyundai Motor·Kia Operating Profit 21 Trillion KRW in Q1-Q3
German Volkswagen Stagnates at 19 Trillion KRW

Hyundai Motor Company and Kia's cumulative operating profit from the first to the third quarter of this year was recorded as the second highest, following Japan's Toyota Group. They surpassed Germany's Volkswagen Group, making it highly likely that they will rank second on an annual basis as well. In terms of finished vehicle sales volume, Hyundai Motor Group ranks third after Toyota and Volkswagen.

On the 7th, an analysis of the performance of the three companies showed that Hyundai Motor Group (Hyundai Motor, Kia, Genesis) recorded sales of 69.4481 trillion KRW and operating profit of 6.4622 trillion KRW in the third quarter of this year. The cumulative sales and operating profit from the first to the third quarter of this year were 208.9081 trillion KRW and 21.3681 trillion KRW, respectively.

Hyundai Motor Company and Kia Headquarters Building in Yangjae-dong, Seoul. Photo by Jinhyung Kang aymsdream@

In terms of operating profit, Hyundai Motor Group ranked second after Toyota in both the third quarter and the cumulative first to third quarters. According to the recent performance announced by Toyota, sales were 11.4446 trillion JPY (103.8 trillion KRW), and operating profit was 1.1558 trillion JPY (10.5 trillion KRW). For the cumulative first to third quarters, sales were 34.355 trillion JPY (311.5 trillion KRW), and operating profit was 3.5768 trillion JPY (32.4 trillion KRW).

Volkswagen Group recorded sales of 78.5 billion EUR (118 trillion KRW) and operating profit of 2.86 billion EUR (4.3 trillion KRW) in the third quarter of this year. On a cumulative basis from the first to third quarters, sales were 237.279 billion EUR (355.8 trillion KRW), and operating profit was 12.97 billion EUR (19.3557 trillion KRW). In terms of sales alone, Volkswagen leads among the three companies, but it lags behind in profitability. Volkswagen also sells high-end brands such as Lamborghini and Bentley, which generally puts it ahead in sales figures.

With Hyundai Motor Group's operating profit exceeding Volkswagen's by more than 2 trillion KRW from the first to third quarters, it is highly likely to achieve second place on an annual basis as well. Despite reflecting about 1 trillion KRW in provisions for warranty extensions in the third quarter, Hyundai Motor Group's profitability was not poor. Comparing operating profit margins for the first to third quarters of this year, Toyota stands at 10.4%, Hyundai Motor Group at 10.2%, and Volkswagen Group at about 5.4%, showing a difference of about twice.

AFP Yonhap News

The widening profitability gap appears to be due to a combination of factors such as sluggish business in China and exchange rate effects. Hyundai and Toyota benefited from their domestic currencies maintaining low values throughout the year, which boosted profitability. Volkswagen's sales in China account for more than one-third of its total, but recent aggressive moves by local electric vehicle manufacturers have led to sluggish local sales. Unlike Asian companies, Volkswagen's weak hybrid lineup is also a disadvantage.

Based on global sales volume up to the third quarter of this year, Hyundai Motor Group sold approximately 5.395 million units, ranking third after Toyota (7.177 million units) and Volkswagen (6.524 million units).