Hyundai Motor has reported a decline in operating profit for the third quarter, falling short of market expectations. The company's operating profit decreased by 7% to 3.6 trillion won ($2.6 billion) compared to the same quarter last year.
The decline in profit can be attributed to warranty costs related to issues with the Santa Fe SUV engines in the United States and increased sales incentives due to a global slowdown in car demand. Hyundai's Chief Financial Officer, Lee Seung-jo, mentioned the challenging business environment for the automotive industry, citing policy uncertainties and geopolitical risks.
Hyundai's global retail sales experienced a 5% decline in the third quarter, with a drop in sales in Europe offsetting gains in the United States and South Korea. The company also reported a decrease in electric vehicle (EV) sales and plans to double its hybrid vehicle lineup to boost profitability.
Major European manufacturers such as Volkswagen, Mercedes-Benz, and BMW are also facing challenges in the auto industry.
Despite the challenges, Hyundai aims for an operating margin of 8% to 9% by 2024. The company is focusing on long-term growth strategies, including a public listing of its India unit to enhance competitiveness in the Indian market. Hyundai is exploring collaborative opportunities with General Motors to develop joint vehicles and clean-energy technologies. The company's new factory in Georgia is expected to increase output and qualify for U.S. federal tax credits. Hyundai's ability to adapt to changing market dynamics will be crucial in maintaining its position as a leading automaker.