Hybrid sales drive up Hyundai Motor's Q2 earnings

Hyundai Motor Company on Thursday reported a record-breaking quarterly revenue for the second quarter of this year, marking a 6.6 percent increase from last year to reach 45.02 trillion won ($32.6 billion).

The company attributed the results to an improved sales mix driven by the rising popularity of hybrid vehicles, which accounted for a double-digit proportion of sales for the first time, along with favorable currency exchange rates.

In the same April-June period, Hyundai's operating profits also reached an all-time high, growing by 0.7 percent year-over-year to 4.28 trillion won, with an operating profit margin of 9.5 percent. Net profit, including contributions from minority interests, surged by 24.7 percent to 4.17 trillion won.

Globally, Hyundai sold 1,057,168 vehicles in the second quarter, maintaining nearly the same volume as last year. Excluding China, sales rose by 2.2 percent, driven by robust performance in North America. International sales outside Korea increased by 2 percent to 871,431 units, thanks to new models such as the Santa Fe, Santa Fe Hybrid and the refreshed Genesis GV80.

In contrast, domestic sales in Korea fell by 9.6 percent to 185,737 units. Despite this decline, the strong sales of sport utility vehicles and hybrids, like the new Santa Fe Hybrid, helped maintain a healthy sales mix.

Hyundai's eco-friendly vehicle sales, encompassing hybrids, plug-in hybrids, battery electric vehicles and fuel cell electric vehicles, totaled 192,242 units, a slight increase of 0.2 percent from the previous year. Hybrid models saw significant growth, with sales increasing by 26.4 percent to 122,421 units. Consequently, hybrids accounted for 11.6 percent of total sales, up 2.4 percentage points from the same period last year. This growth in hybrid sales offset a 24.7 percent decline in EV sales, which stood at 58,950 units.

"We expect continued strong demand for hybrids in the short term as EV market growth slows. Long-term, we anticipate EVs will dominate the market for eco-friendly vehicles," Hyundai said.

Hyundai also declared a quarterly dividend of 2,000 won, reflecting a 33.3 percent increase from 2023. This aligns with the shareholder return policy announced in April last year, which includes a payout ratio of at least 25 percent of the consolidated net profit attributable to controlling interest, quarterly dividends and an annual cancellation of 1 percent of its existing treasury stock for the next three years.

To secure its market position, Hyundai said it plans to diversify its hybrid and electric vehicle lineup, including introducing the new sub-compact EV, Inster and expanding the Ioniq series.

“With the economic landscape being as unpredictable as it is and competition heating up, our goal is to sharpen our focus on regional and product mix to maintain our profit margins,” Hyundai said.

With the upcoming US presidential election creating uncertainty, particularly with Kamala Harris replacing Joe Biden as the Democratic Party candidate and Donald Trump proposing a 10 percent import tariff on all US imports, Hyundai said it is monitoring the situation closely. The company remains cautious about whether these tariffs will include trade partners like South Korea.

Regarding the potential repeal of the Inflation Reduction Act under another Trump administration, Hyundai believes it is unlikely given that many IRA beneficiaries are in Republican states.

Hyundai also announced plans to boost hybrid vehicle production at its Hyundai Motor Group Metaplant America in Georgia. Initially set to focus primarily on EVs with an annual capacity of 500,000 units starting this October, the plant will now accommodate increasing hybrid demand. Specific plans for hybrid production adjustments will be detailed at the CEO Investor Day on Aug. 28.