Hyundai Motor Co. reported a decline in operating profit and global sales last year, marking the first downturn in four years. Analysts suggest that the automotive giant, a key player in South Korea’s economy, has been affected by the broader economic slowdown.
On Jan. 23, Hyundai said its operating profit for 2024 fell 5.9% from the previous year to 14.24 trillion won ($9.95 billion). Global vehicle sales dropped 1.8% to 4.14 million units. This marked the first year-on-year decline in both figures since the COVID-19 pandemic in 2020. Despite the dip in profit, Hyundai’s revenue grew 7.7% to a record $122.46 billion. However, its operating margin, a key measure of profitability, fell by 1.2 percentage points to 8.1%.
Hyundai’s hybrid vehicle sales performed well in the United States, but sales in major markets, including S. Korea, Europe, and China, decreased. U.S. sales rose 4.8% to 911,805 units, marking an all-time high, but domestic sales declined by 7.5%.
In Europe, sales dropped 4.2% due to an economic downturn and what analysts have dubbed the “electric vehicle chasm,” or a temporary plateau in EV demand. European sales were also affected by the ongoing Russia-Ukraine war and the removal of EV subsidies. In China, sales plummeted by over 40% as local EV manufacturers gained ground rapidly.
The strong U.S. dollar further squeezed Hyundai’s profitability. The company increased incentives in markets like Europe and North America to maintain market share amid sluggish global sales, which compounded the challenges posed by unfavorable exchange rates. On the brighter side, sales of higher-priced models boosted revenue. SUVs and the premium Genesis brand accounted for 61.7% of Hyundai’s total sales last year, up 1.9 percentage points from 2023.
Looking ahead, Hyundai faces additional challenges, particularly in the United States, where the second term of Donald Trump’s administration is expected to bring policies such as the removal of EV subsidies and the introduction of new tariffs. Cho Chul, a senior researcher at the Korea Institute for Industrial Economics and Trade, noted that domestic demand could remain sluggish, while Trump’s trade policies might further restrict global trade.
