As political headwinds persist in pulling down sales in China being Hyundai’s largest market, Hyundai Motor’s cheerless results extend into a 14th consecutive quarter. Likewise, in the United States, higher incentives have been detrimental to business.
The South Korean company, Hyundai, and its partner Kia Motors remain the world’s 5th top automaker. The firm’s economy which seemed to be on its recovery path got struck by China’s backlash over the resolution by Seoul to deploy an anti-missile system without any signs of abating.
For the second quarter of the year, Hyundai Motors gave out its net profit as $817 billion above $720.14 million which means about 51 percent increase from a year ago, marking the 14th similar decline in a row. Analysts estimated a 1.35 trillion won.
Dearth in sales for Hyundai
Hyundai’s sales in China dropped 29 percent during the first half of 2017 following the company’s reliance on sedans whereas customers are massively opting for sport utility vehicles (SUV).
The weak brand image of Hyundai has caused rival brands – Toyota Motor, Honda Motor and General Motor – to make more sales in China last month. Although GM pointed out the pricing challenges, it‘s said to have set its second-quarter sales record in China.
Hyundai Motors have mapped out plans to establish a new factory in Chongqing in the later part of August. The firm hopes to strike a balance in its weak sales by going into the southwestern region although some of its industries in the east are not used to their maximum capacity.
In the U.S. Hyundai experienced a 7.4 percent drop in sales in January – the second largest sales decline after its affiliate, Kia Motors’ Sonata sedans lost ground for SUVs. The sales decline occurred despite the firm’s boosting incentives to increase sales in the U.S.
Hyundai Motors will probably face more pressures following the growth in competition in its second market where Toyota and Honda will be launching their newest mid-sized sedans this month. This is going off against the Sonata Hyundai Motor offers even as sales of sedan drop across the world.
Hyundai shares slashed earlier gains after the announcement of its gains and were up 1 percent by 0514 GMT.