Hyundai Motor Co yesterday said its quarterly profit was halved to its lowest level since 2010 as its auto sales in China and the US plunged, with the South Korean automaker paying dearly for lagging in its sport utility vehicle (SUV) lineup.
Net income for the three-month quarter ended last month was 816.9 billion won (US$729.7 million), down 51 percent from 1.7 trillion won a year earlier, Hyundai said.
The result was worse than expected. Analysts had predicted a net profit of 1.4 trillion won, financial data provider FactSet said.
It was also the smallest profit for Hyundai since it began reporting quarterly results under new standards in 2010.
Operating profit sank 24 percent to 1.3 trillion won during the period, while sales fell 2 percent to 24.3 trillion won.
Hyundai’s eroding profit over the past three years has been attributed to its failure to respond to a shift in consumer preference toward SUVs. Many consumers have ditched passenger sedans, which were Hyundai’s forte, to snap up SUVs, where it lacks a varied lineup.
Hyundai earlier this year offered bigger sales incentives to counter weakening demand for passenger sedans in the US market.
In China, the automaker suffered from political tensions between Beijing and Seoul over a US missile defense system.
The maker of the full-size Genesis sedan saw China sales sink 64 percent in the period from a year earlier as Chinese consumers shunned South Korean cars due to Seoul’s decision to deploy a US missile defense system.
China is opposed to deploying the anti-missile system in South Korea because it worries that its powerful radars would peer into its territory.
In the first half of this year, Hyundai’s sales in China dropped 42 percent.
The company is expanding its SUV lineup and counting on its newly launched Kona, its first subcompact SUV, which is to be released in Europe and the US in coming months.
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