Hyundai Motor Group’s headquarters in Gangnam, Seoul (Hyundai Motor Group)
Hyundai Motor Group’s headquarters in Gangnam, Seoul (Hyundai Motor Group)

Hyundai Motor Company fell short of achieving record-breaking performance last year, as profits declined for the first time in two years amid deepening uncertainties in the domestic economy and major automotive markets.

According to the automaker’s earnings report on Thursday, the auto giant’s annual operating profit for 2024 dropped 5.9 percent to 14.2 trillion won ($9.9 billion) compared to 2023, while its sales revenue climbed 7.7 percent to 175.2 trillion won. Its profit margin also fell from 9.3 percent to 8.1 percent during the same period.

Although the company surpassed its annual revenue target of over 169.2 trillion won, its profit went below the projected 16.3 trillion won. Regarding market estimates, the profit missed the 14.8 trillion won forecast, although sales edged up from 173.5 trillion won. Last year’s sales volume worldwide decreased 1.8 percent from 2023 to 4.1 million units, failing to reach its target of 4.2 million.

As for eco-friendly cars, sales surged 8.9 percent to 757,191 units in global markets, including 218,500 electric vehicles and 496,780 hybrids.

Hyundai Motors said its operating profit was hit by a surge in warranty expenses along with a rise in incentive costs in the US and Europe. Notably, President Yoon Suk Yeol’s martial law declaration at the end of 2024 fueled a surge in won–dollar exchange rates. This led to increased warranty expenses by approximately 1.2 trillion won, which are considered debts.

This year, Hyundai Motor aims to achieve revenue growth of 3 to 4 percent and an operating profit margin of 7 to 8 percent, selling 4.17 million units worldwide. The company will also expand investments to 16.9 trillion won, including 8.6 trillion won in capital expenditure, 6.7 trillion won in research and development and 1.6 trillion won in strategic investments.

During a conference call, Koo Za-yong, the head of investor relations at Hyundai Motor Company, pledged to closely monitor the second Donald Trump administration’s proposal to scrap the EV consumer subsidy outlined in the Inflation Reduction Act.

Koo stated, “We do not anticipate the repeal process to end soon. The subsidy package will likely remain in place throughout this year, although it could be rescinded as early as September. We’re exploring various countermeasures, including ramping up the annual capacity of our (meta) plant in Georgia to produce the Ioniq 5 and Ioniq 9, which would qualify for these subsidies.”

Addressing the potential impact of Trump’s universal tariffs of at least 10 percent on Hyundai cars, Koo downplayed the effect, noting that nearly 60 percent of the company’s production is based locally. In contrast, Koo pointed out that Hyundai’s Asian rivals, Toyota and Honda, manufacture between 50 and 100 percent of their key vehicle models in Mexico or Canada, suggesting they may experience a more negative impact from the tariffs than Hyundai.

Strengthening its ties with General Motors, the Korean carmaker plans to sign bilateral binding contracts to collaborate on the joint purchase of automotive parts in North America and Latin America and launch commercial and passenger cars by the first quarter of this year. In particular, Hyundai Motor is considering rebranding electrified commercial vehicles with GM to seek greater footing in the North American market.

By Byun Hye-jin (hyejin2@heraldcorp.com)