The FINANCIAL — Hyundai Motor Co. reported another quarterly earnings decline on October 22, hit by slowing demand in China and emerging markets, and by fierce competition in the U.S. that pushed up marketing costs, according to Nasdaq.
Hyundai, the world’s fifth-biggest auto maker by sales when combined with affiliate Kia Motors Corp., said sales in China slumped by nearly a fifth in the three months ended in September from a year earlier.
In the U.S., the Korean company shipped a record volume of autos in the third quarter, but the cost of incentives rose sharply from a year earlier as Hyundai spent more to lure customers.
Hyundai said July-September net profit was 1.21 trillion won ($1.1 billion), down 25% from 1.62 trillion won a year earlier. The result was worse than market expectations for 1.52 trillion won.
The seventh straight quarterly profit decline comes as sedans like the midsize Sonata–which the company has aggressively marketed for years–fall out of favor with consumers who prefer larger sport-utility vehicles and trucks that have become cheaper to drive as fuel prices fall.
On October 21, General Motors Co. posted a record third-quarter operating profit in its core North American unit, fueled by the strongest U.S. demand in a decade for profitable trucks and SUVs.
Hyundai has made some progress recently in catching up with consumer tastes. Sluggish sales in China began to improve with last month’s launch of the revamped Tucson, Hyunda’s flagship midsize SUV. The Tucson and its larger cousin, the Santa Fe, underpinned better sales in the U.S. as well.
Hyundai’s third-quarter operating profit fell 8.8% to 1.5 trillion won from 1.65 trillion won. Revenue rose 10% to 23.43 trillion won from 21.28 trillion won.
Analysts expect profit to improve in the current quarter, helped by favorable foreign-exchange rates as the won weakens, and by rising sales of new cars.