"Hyundai Struggles While Kia Thrives"... July Sales Bring Mixed Fortunes for Sibling Brands [Click e-Stock]

Impact of Prolonged Hyundai Motor Wage Negotiations
Kia Benefits from New EV5 and Seltos HEV Models
Weakening Won Becomes a Variable... Risk of Profitability Decline

The automotive sales trends of Hyundai Motor Company and Kia Corporation continue to show divergent patterns. While Kia set a new record for wholesale sales in July, Hyundai Motor Company experienced a decline in global wholesale sales for the tenth consecutive month. As this pattern looks set to continue into the third quarter of this year, the lower KRW-USD exchange rate compared to the first half is expected to be a key variable.

On August 5, Moon Yongkwon, a research analyst at Shin Young Securities, presented this analysis in a recent report. According to the report, Hyundai Motor Company's global wholesale sales in July amounted to 318,454 vehicles, down 5% compared to the same month last year. Domestic sales fell by 14% to 48,113 units, while overseas sales dropped by 3% to 270,341 units.

The sluggish domestic sales were affected by partial strikes at local factories due to prolonged wage negotiations. Although the number of operating days at domestic factories increased by 28% from a year earlier, the combined impact of these partial strikes and the expanding domestic market presence of imported cars and Kia resulted in continued sales declines.

By model, the decline in Palisade sales was a drag. Nineteen months after the release of the new model, sales of the Palisade in July fell 59% year-on-year. On the other hand, the Grandeur, which launched a facelift model, saw its sales rise 94%, partially offsetting the overall decline.

Kia, by contrast, recorded 298,037 vehicles in global wholesale sales in July, a 13% year-on-year increase. Domestic sales rose by 21% to 54,735 units, while overseas sales rose by 12% to 243,302 units. Both domestic and overseas sales performed strongly, leading to Kia's largest-ever July wholesale sales.

Kia’s domestic sales were driven by strong demand for new models, particularly the EV5 and the Seltos Hybrid. Sales of the compact Morning also skyrocketed 307% year-on-year, contributing to the improved domestic record. Kia once again surpassed Hyundai Motor Company in domestic sales in July, as it had done in April.

Electrified vehicle sales were also robust. Kia's domestic electric vehicle (EV) sales reached 13,000 units in July, up 93% from a year earlier. The proportion of EVs increased to 24% of Kia’s domestic sales. Hybrid electric vehicle (HEV) sales also increased by 22% to 18,000 units.

The two companies diverged in this aspect as well. Thanks to strong sales of the Ioniq 9 and Ioniq 5, Hyundai Motor Company's domestic EV sales rose by 13%. However, hybrid sales fell by 8%, as sales of the Palisade Hybrid and Tucson Hybrid dropped by 63% and 57%, respectively.

Shin Young Securities believes that Hyundai Motor Company’s third quarter results are unlikely to meet market expectations. Currently, the market consensus for Hyundai Motor Company's third quarter operating profit is KRW 3.1 trillion, which is above the second quarter result of KRW 2.85 trillion. However, Shin Young Securities estimates it will be KRW 2.7 trillion. They judged that it may only be in the fourth quarter, when the wage negotiations are settled and new launches of Avante and Tucson have an effect, that results may come in line with consensus expectations.

Analyst Moon remarked, "Kia remains our top pick among automakers, but the weak won is a factor that needs to be closely watched." He added, "If the KRW-USD exchange rate consistently remains below the 1,452 won level, the currency effect could begin to undermine profitability starting in the fourth quarter."

This content was produced with the assistance of AI translation services.