Hyundai Motor Company reported record revenue for the second quarter of this year, yet its operating profit plummeted by over 20% compared to the previous year. Factors contributing to this decline include the ongoing conflict in the Middle East, U.S. tariffs, and a slowdown in global automotive demand. The company plans to rebound in the second half of the year through aggressive new vehicle launches and sales of high-value models such as electric vehicles (EVs) and hybrids (HEVs), although challenges like strikes loom ahead.
On July 23, during an earnings conference call, Hyundai announced that it achieved a revenue of 49.2153 trillion won, an operating profit of 2.8509 trillion won, and a net profit of 2.8880 trillion won for the second quarter. While revenue increased by 1.9% year-on-year, both operating profit and net profit saw declines of 20.8% and 11.2%, respectively.
Despite strong sales of HEVs, the operating profit margin fell by 1.7 percentage points to 5.8%, impacted by rising raw material costs and production disruptions due to fires at parts suppliers.
A Hyundai representative stated, "The global automotive industry is facing unprecedented challenges, with demand down 3.8% year-on-year due to geopolitical issues and intensified competition. We will work to improve our performance through cost-cutting efforts, stabilization of raw material prices, and proactive new vehicle launches in the second half of the year."
The mismatch between revenue and profit has accelerated since the U.S. tariff policy took effect in the third quarter of last year. The Trump administration imposed a 25% tariff on imported vehicles starting in April 2022, resulting in Hyundai incurring approximately 3.3 trillion won in tariff costs last year. In the second quarter of this year, tariff costs continued to rise, totaling 1.8 trillion won for the first and second quarters combined.
As a result, while quarterly revenue reached a new high since the second quarter of last year (48.2867 trillion won), operating profit dropped by about 21%, indicating a continuous decline in profitability. The cost of goods sold ratio also increased by 1.1 percentage points year-on-year to 82.2%. The ratio of selling and administrative expenses to revenue remained similar to last year at 11.9%.
Global sales are also on a downward trend. In the second quarter, global sales totaled 991,885 units, a 6.9% decrease from the same period last year.
In South Korea, sales fell by 16.4% year-on-year to 157,647 units due to supply disruptions from parts supplier fires, while overseas sales decreased by 4.9% to 834,238 units. In the U.S. market, however, Hyundai managed to sell 264,587 units, a 0.9% increase compared to the same period last year, but overall sales are slowing due to deteriorating global automotive market demand, including the impact of the Middle East conflict.
Nonetheless, in the second quarter, global sales of electrified vehicles reached a record high, driven by increased demand for HEVs. Sales of EVs totaled 69,366 units, and HEVs reached 187,661 units, resulting in a total of 266,627 electrified vehicles sold, a 1.7% increase year-on-year. The share of electrified vehicles and HEVs in total global sales also reached record highs of 26.9% and 18.9%, respectively.
A Hyundai representative noted, "In the second quarter, we faced a challenging business environment due to geopolitical uncertainties and temporary supply chain issues, but in the second half, we will respond more flexibly to market demand based on a diverse powertrain lineup and region-specific portfolio."
* This article has been translated by AI.
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