Sell More Cars, Earn Less... Hyundai Motor's 'Robot' Bet [Weekend Money]

Operating profit forecast to fall 7.8% next year
AI investment weighs amid intensifying competition
Concrete results from partnerships with NVIDIA and Google will be key

Will selling more cars lead to higher profits? Meritz Securities' outlook for Hyundai Motor's performance next year does not follow that formula. It expects sales to rise slightly but operating profit to decline. Competition in the auto market is intensifying, and expanding into robotics and artificial intelligence (AI) requires investment. The analysis is that while robots hold promise for the future, how much Hyundai Motor can earn from cars until then has also become important.

Kim Junseong, a researcher at Meritz Securities, forecast Hyundai Motor's consolidated sales volume next year at 3.86 million vehicles, up 0.5% from this year's estimate. However, he estimated revenue at about KRW 184.7 trillion and operating profit at about KRW 9.55 trillion, down 2.9% and 7.8%, respectively. In other words, the number of cars sold and the profit earned per car are moving in opposite directions.

One reason is the aggressive push by Chinese automakers. With global auto demand not growing significantly, if Chinese companies expand their sales overseas, established automakers will have to compete more fiercely for the same customers. "Competition will intensify in Hyundai Motor's key markets, including Korea, the United States and Europe," Kim said. "It will be difficult to protect profits unless the company lowers costs or differentiates itself through autonomous-driving software."

At the same time, spending on future growth areas is mounting, including investment in robotics, represented by "physical AI," and AI data centers. Partnerships are already underway. Hyundai Motor Group has begun building AI infrastructure with NVIDIA to support the development of autonomous driving, smart factories and robots. In January 2026, Boston Dynamics, part of Hyundai Motor Group, announced a joint research plan with Google DeepMind to integrate AI into its Atlas humanoid robot at CES.

However, having high-profile partners alone will not give Hyundai Motor a competitive edge of its own. NVIDIA is working with multiple automakers and robotics companies at the same time. In fact, China's BYD and Geely, as well as Japan's Nissan, have also adopted NVIDIA's autonomous-driving platform. Ultimately, analysts say, what matters is how different the results Hyundai Motor delivers will be. Increased investment weighs on near-term profitability, but distinctive results could provide an opportunity to reassess the company's value. For that assessment to change, the company will ultimately need to achieve results beyond automobiles. Meritz Securities set a target price of KRW 380,000 for Hyundai Motor using its estimated 2028 earnings per share (EPS) and a price-to-earnings (PER) ratio of 10.5 times for comparable companies, reflecting that the company is still being viewed as a traditional automaker.

Kim emphasized, "To expand Hyundai Motor's valuation, we need to see the specifics of its discussions on collaboration with NVIDIA and Google, as well as tangible results from its technology development."

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