South Korean brand remains bullish in the face of Q3 2022 profits dropping 3.4 per cent year on year.
Hyundai recorded a 3.4 per cent shortfall in year-on-year operating profits in the third quarter of 2022 despite growth in global sales volumes, as parts shortages eased.
The firm has attributed the fall to a ₩1.36 trillion (AUD$1.49 billion) provision for costs related to the Theta II GDI engine, which was the subject of a 1.7-million-vehicle recall between 2015 and 2017.
Replacement engines were given lifetime warranties, which – up to seven years later – are now being exercised by customers running them for longer due to the increased cost and wait time for new cars.
This provision therefore slashed the brand’s Q3 profit by more than half that predicted by analysts, reported Reuters.
Nonetheless, it was a strong quarter for the South Korean manufacturer. Global sales increased by 14.0 per cent year on year to just over a million units. Meanwhile, revenues soared 31.0 per cent to ₩37.7 trillion (AUD$41.3bn), although this was buoyed by the weakening of the South Korean won currency.
Hyundai has therefore increased its 2022 revenue growth forecast by 6 per cent to 19-20 per cent. Predicted operating profit margins were raised by 1 per cent to 6.5-7.5 per cent.
This bullishness has been prompted by significant growth in sales of highly profitable premium models.
Sales of electric vehicles – which accounted for 5.1 per cent of Hyundai’s overall output in Q3 – grew 27.1 per cent year on year to around 52,000 units.
This was helped by the launch of the Hyundai Ioniq 6 – a long-range rival to the Tesla Model 3 – which recorded 2660 deliveries and 40,000 back orders in its home market.
Hyundai-owned premium marque Genesis, which recently launched the GV60 crossover, sold 8.7 per cent more vehicles than in Q3 2021 – approximately 50,000 in total.
Despite the improvement in year-on-year sales, Hyundai reduced its annual sales forecast by 7.0 per cent to 4.01 million units, citing parts shortages and the rocketing cost of raw materials.
Parts shortages are expected to continue to affect the wider industry over the next year. Stellantis CEO Carlos Tavares recently said the semiconductor chip shortage will end by late 2023 but added that a small number of “trouble makers” were disrupting supply in the meantime.