Hyundai’s Q4 profit jumps with EVs to fuel sales drive in 2021
Its fourth-quarter profit was up 57%, with the carmaker soon expected to introduce an EV-only platform
Seoul — Hyundai Motor said on Tuesday it expects sales in US and China to surge in 2021, driven by the launch of new electric cars and SUVs, after reporting its best quarterly profit in more than three years.
Hyundai’s holiday-quarter profit jumped 57% on more demand for premium-margin SUVs, but overall sales volumes fell 5% amid a broader economic weakness due to the Covid-19 pandemic.
The promising outlook is testament to Hyundai’s big electric vehicle (EV) push. The company, which together with affiliate Kia is among the world’s top 10 carmakers, is soon expected to introduce an EV-only platform that will use its own battery technology to cut time and costs.
On its earnings call, however, Hyundai, did not provide any update on recently reported talks between itself and Apple about an electric car and battery tie-up.
On sales, the carmaker said it expects a 12% jump in its biggest market, North America, in 2021. Its sales in the fourth quarter to end-December slipped 2% in the region.
“With our line-up, with new models ready to launch in the US, we aim to increase our market share to 4.8% this year,” senior vice-president Koo Za-yong said on the call.
In 2020, 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 expect a boost to Hyundai’s EV sales in 2021 despite a global recall of Kona Electric due to fires.
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.
“In 2020, Hyundai basically didn’t do much in China, while other carmakers launched new models as the Chinese automotive 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.
Best quarter since 2017
In the fourth quarter of 2020, Hyundai earned 1.3-trillion won ($1.18bn), 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 end-December. A stronger won erodes the value of overseas sales for South Korean companies.
Hyundai shares, up more than a third in January, 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 US 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 2020 fourth quarter, especially in the US, where higher-average selling price cars, such as SUVs, saw increasing demand as consumers shun public transit because of Covid-19 and low petrol prices,” KTB’s Lee said. “Holiday deals helped as well.”
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