Skip to main content

South Korea’s Hyundai Motor Co laid out its U.S. sales turnaround plan on Monday with an expanded line-up of sport-utility vehicles (SUV), after posting its biggest quarterly profit jump in seven years.

The automaker forecast its U.S. market share to begin rising again from this year, targeting a year-end share of 4.2 per cent versus 3.9 per cent last year, with sales of its upgraded Palisade SUV starting from the second half. It aims for a U.S. share of 5.2 per cent by 2023.

Solid performance at home and in the United States in the three months through June helped offset a sales slump in China, where a slowing economy, trade war with the United States and a lack of competitive models prompted the automaker to suspend production at its oldest factory earlier this year.

Story continues below advertisement

To maintain momentum in the United States - its biggest overseas market - Hyundai said it plans to boost the proportion of SUVs in its U.S. line-up to 67 per cent in 2023 from 51 per cent in 2019, as it works to catch up with a shift in consumer preference.

“It was a surprise when Hyundai revealed an aggressive U.S. turnaround plan, but I don’t see any problem in it meeting its annual sales target there,” said analyst Kim Joon-sung at Meritz Securities.

Hyundai’s revival is being led by heir-apparent Euisun Chung following six years of profit decline. The executive vice chairman is widely considered to be seeking investor support to revisit an ownership restructuring plan as he prepares to take over from his 81-year-old father and chairman.

A previous proposal was scrapped last year following shareholder opposition, notably from U.S. hedge fund Elliott Management Corp.

Since last year, Chung has brought in a flurry of foreign executives in a sweeping reshuffle at a firm dominated by Koreans. Most recently, in April, it appointed an ex-ally of Nissan Motor Co Ltd’s ousted Chairman Carlos Ghosn as global chief operating officer and Americas chief.

In the April-June period, U.S. sales gained 3 per cent while a weak Korean won against the U.S. dollar raised the value repatriated income. At home, new models such as the Palisade SUV and Sonata sedan helped sales jump 8.1 per cent.

Overall, net profit for the quarter rose 31.2 per cent to 919.3 billion won ($780.44-million), just short of market estimates but still Hyundai’s biggest quarterly percentage gain since the first quarter of 2012.

Story continues below advertisement

Operating profit rose 30.2 per cent on a 9.1 per cent increase in revenue, the automaker said in a stock exchange filing.

Even so, the earnings recovery could weaken as Hyundai braces for a potential strike by its domestic labour union that could disrupt supplies of models such as the Palisade both at home and overseas, analysts said.

The union will vote next Monday whether to approve strike action after walking out of annual wage talks on Friday.

A prolonged dispute could have a greater impact on sales and earnings this year because, unlike in the past three or four years of slow growth, sales of its new models have been brisk, Samsung Securities analyst Esther Yim said in a recent report.

Hyundai stock closed down 1.1 per cent after the earnings announcement, versus the broader market’s 0.1 per cent fall.

This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies