The Hyundai Motor Co says it expects new electric cars and sports utility vehicles (SUVs) will drive a sales surge in the United States and China this year, after reporting its best quarterly profit in over three years.
Hyundai’s holiday-quarter profit jumped 57% on the back of more demand for premium-margin SUVs, but overall sales volumes fell 5% amidst the ongoing Covid-19 pandemic.
The promising outlook is a testament to Hyundai’s big electric vehicle (EV) push. The company, which together with its affiliate Kia Corp is among the world’s top-10 automakers, is soon expected to introduce an EV-only platform that will use its own battery technology to cut time and costs.
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Hyundai, however, did not provide any update on its recently reported talks with Apple Inc about an electric car and battery tie-up.
On sales, the automaker said it expects a 12% jump in its biggest market, North America, in 2021. Its sales in the fourth quarter of 2020 slipped 2% in the region.
“With our line-up with new models ready to launch in the United States, we aim to increase our market share to 4.8% this year,” Senior Vice-President Koo Za-yong said.
Last year, the company managed to slightly advance its US market share to 4.4%, helped by sales of the Palisade SUV and Kona EV, he said, despite a 10% fall in sales.
Analysts still expect the boost to Hyundai’s EV sales this year despite a global recall of the Kona Electric because of a short-circuiting problem.
Hyundai said it expects sales to jump 28% in China, the world’s top car market, where it also plans to release the electric version of its Mistra sedan this year.
“Last year, Hyundai basically didn’t do much in China, while other automakers launched new models as the Chinese auto market saw a rapid recovery amid the pandemic … Hyundai’s China strategy seems to focus on electric cars,” said Lee Han-joon, an analyst at KTB Investment & Securities.
Hyundai expects to sell 562,000 vehicles in China in 2021, and estimates sales in North America will jump to 909,000.
In the fourth quarter, Hyundai earned 1.3 trillion won ($1.18 billion), the highest since at least early 2017. But it fell short of an average analyst estimate of 1.5 trillion won, compiled by Refinitiv, due to a strong won.
The South Korean currency rose about 7% against the dollar in the three months to December. A stronger won erodes the value of overseas sales for South Korean companies.
Hyundai shares, up more than a third this month led by news of the Apple tie-up, fell about 3% on Tuesday. The broader KOSPI was down 2%.
Hyundai’s quarterly revenue rose 5% to 29.2 trillion won as it saw solid demand for its cars in the United States and emerging markets such as India despite the pandemic.
While demand for its vehicles from car-rental companies that purchase in bulk is still tepid, analysts said, sales of its luxury cars are expected to remain a bright spot.
Hyundai had delivered a loss in the October quarter as it provisioned for a big engine-quality related bill.
“Hyundai had a good fourth quarter, especially in the United States, where higher average-selling-price cars such as SUVs saw increasing demand as consumers shun public transit because of Covid-19 and low gasoline prices,” KTB’s Lee said.