April 25, 2024

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[THE INVESTOR] Korea’s top automakers Hyundai Motor and Kia Motors reported weak operating margins in the first half of this year, ranking in the bottom half of a list of 12 global carmakers.

Citing regulatory filings, Hana Financial Investment said on Aug. 14 that from January to June, Hyundai’s operating margin narrowed to 5.4 percent from 6.6 percent a year earlier, marking the lowest since 2010 when publicly traded firms were required to file earnings under the International Financial Reporting Standards system. Operating margin is a key measurement of a manufacturer’s profitability, calculated by dividing profit by sales. Kia’s margin came to 3 percent in the cited period, down 2.2 percent on-year. 

In the list, Hyundai fell five notches to share ninth place with Japan’s Honda. Kia slipped four rankings to rank the least profitable automaker in the group. With an 11.2 percent profit margin, German luxury carmaker BMW ranked top. Daimler came in second place with 9.6 percent, while General Motors followed with 8 percent, trailed by VW with 7.7 percent, Toyota with 7 percent and Nissan with 6.3 percent.

The bleak outcome for Hyundai Motor Group, the world’s No. 5 automotive group, was largely due to slumping sales in its major overseas markets, the US and China, the carmaker said. 

Hyundai’s China sales slumped 30 percent on-year in the first half of this year, hit by Beijing’s economic backlash over the deployment of a controversial US-led THAAD system in Korea and the rise of Chinese carmakers. In the US, Hyundai’s sales dropped 7.4 percent. 

Industry watchers project Hyundai to continue losing ground in its two largest overseas markets throughout the latter half of this year, raising concerns that the auto giant will likely miss its annual sales target for the third straight year.

By Ahn Sung-mi (sahn@heraldcorp.com)