The Korea Herald


Hyundai Motor posts best-ever earnings on improved profitability

Carmaker turns to EV lease market in US to cope with subsidy cuts

By Kan Hyeong-woo

Published : Jan. 26, 2023 - 17:31

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Ioniq 6 (Hyundai Motor Group) Ioniq 6 (Hyundai Motor Group)

Hyundai Motor posted a record-high operating profit of 9.8 trillion won ($8 billion) last year as it sold almost 4 million vehicles across the world, the South Korean automaker said Thursday.

Despite the global economic downturn, Hyundai Motor’s yearly sales also recorded 142.5 trillion won, up 21.2 percent on year to set a new high.

With operating profit having shot up 47 percent on-year to an all-time high for the whole of 2022, the automaker said it was thanks to the strong dollar and improved sales of products with higher profitability.

“The production has been increasing as the supply shortage of semiconductors improved. The stocks in major markets appear to remain at a low level, so we expect the pent-up demand to be steady,” said a Hyundai Motor official.

“However, there are concerns about a decrease in demand due to business uncertainties such as geopolitical risks and interest rate hikes.”

Announcing the automaker’s guidance figures for next year, Hyundai Motor has set a goal of selling 4.32 million cars, and aims to reach between a 10.5 percent and 11.5 percent increase in sales.

Of the 3.94 million units Hyundai Motor sold last year, 505,000 were eco-friendly cars. Among them, all-electric vehicles made up for about 40 percent. This year, the automaker aims to sell 330,000 EVs, up 54 percent from 2022, the firm said in an earnings call.

The automaker explained that the business transition into automation and strengthening the lineup of eco-friendly vehicles continued as it saw the sales of EVs such as Ioniq 5 and 6 and GV60 go up.

The automaker announced in a regulatory filing Thursday that it plans to invest 10.5 trillion won this year to increase the number of vehicle products, continue building the manufacturing plant in Georgia in the US and secure future technology in a sustainable manner.

Regarding the Biden Administration’s Inflation Reduction Act aimed at bolstering made-in-America EVs, Hyundai Motor said it plans to increase its leasing business as IRA incentives will be given for leased EVs.

Seo Gang-hyun, Hyundai Motor’s executive vice president heading the company’s planning and finance division, said the automaker plans to boost the current portion of EV leasing, which accounts for less than 5 percent of all EV sales in the US, to 30 percent or higher.

“About concerns on falling prices of used cars due to the increase of leasing, we will expand certified used car businesses to respond to such risks that could happen in the next two to three years,” he said.

Seo sought to reassure investors that it would make sure to curtail the IRA's impact on its US sales and profits before the Georgia EV plant is up and running in 2024. Adding that the company is reviewing multiple options for EV production in the US and battery sourcing, he said the automaker will announce updated countermeasures when the US finalizes the IRA details in March.

Separately, Hyundai Motor will release Ioniq 6 and the all-new Kona EV in the US market in the first quarter and second half, respectively.