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Hyundai Motor matches BMW for profitability

Nov. 19, 2012 - 20:24 By Kim Yon-se
Hyundai Motor saw its profitability match the level of BMW, far outperforming several major automakers such as Volkswagen and General Motors.

Hyundai Motor’s ratio of operating profit to revenue in the vehicle sector came to 10.91 percent during the third quarter, which is nearly equivalent to the 10.94 percent of BMW.

Few carmakers are enjoying a double-digit figure, and Volkswagen and GM recorded below 7 percent.

Market insiders say it is noteworthy that Hyundai Motor, whose main products are aimed at middle-income drivers at home and abroad, reaped similar profitability as BMW, which mostly targets the high-income bracket.

Hyundai executives attributed the high profitability to its business policy of refraining from excessive discounts on vehicles and reducing costs by integrating assembly line platforms.

However, Hyundai and BMW also saw the ratio of operating profit to revenue inch down 0.9 and 1.2 percentage point, respectively, in the third quarter from a quarter before due to the protracted global economic slowdown.

The Korean company pledged to enhance management ― focused more on profitability than business expansion ― as its earnings for the July-September period slightly dropped compared to the previous quarter.

Though the carmaker’s third-quarter operating profit came to 2.05 trillion won ($1.83 billion), up 3.1 percent from a year earlier, the figure is lower by 17.8 percent than the previous quarter, Hyundai Motor said.

In the same vein, Hyundai’s sales and net profit increased by 3.6 percent and 12.9 percent to 19.6 trillion won and 2.1 trillion won, respectively, on a year-on-year basis. But the two sectors fell by 10.5 percent and 15 percent compared to a quarter before.

“The quarter-to-quarter drop in earnings is attributable to weaker production capacity from labor disputes as well as the prolonged slump in domestic sales,” a company spokesman said.

“Uncertainty over the business environment still continues,” he said. “To achieve the yearly target, we would push for production of quality-oriented vehicles and creative marketing strategies.”

In the meantime, Hyundai will introduce a series of vehicles geared for Chinese consumers at an international motor show in China this week, vying to grab a larger share of the world’s largest automobile market, officials said Monday, according to Yonhap News.

The 10th annual Guangzhou International Motor Show is set to kick off on Nov. 23 for a 10-day run in the southern Chinese city. The motor show is one of three major auto shows in China, along with the two others held annually in Beijing and Shanghai.

Hyundai Motor will showcase the eighth generation of its flagship Sonata sedan and the latest models of the Langdong and Yuedong, both of which are Chinese versions of its steady-seller Elantra.

The carmaker will also display the latest version of its subcompact Accent sedan, called the Verna in the Chinese market, and its ix35 sports utility vehicle.

Hyundai Motor’s Yuedong and Langdong are steady sellers in China, making the list of the top 10 best-selling sedans in China last month. Its ix35 is also popular in China, ranking third among the top 15 best-SUVs in October.

“Hyundai Motor attaches great importance to the Chinese market,” said a Hyundai Motor official in China. “We will continue on our mission to bring innovation and meet more personalized demands of Chinese consumers for cars.”

By Kim Yon-se (kys@heraldcorp.com)