Hyundai Motor sets record for profits in past year

Industry

Published: 28 Jan. 2010, 22:33

Hyundai Motor sets record for profits in past year

Thanks in part to the Korean version of a cash-for-clunkers program and a weak local currency, Hyundai Motor, Korea’s largest automaker, posted a record net profit from the domestic production last year, the company reported yesterday.

Its global market share including vehicles from the overseas production is now over 5 percent, also the highest ever, the company said.

Some analysts said a recent setback for Toyota over massive recalls could help Hyundai keep its rapid global emergence this year. But some cautioned that it would take strenuous efforts for the company to carry the momentum at the same pace as last year.

Announcing the 2009 business performance, Hyundai said it recorded a 2.96 trillion won ($2.57 billion) net profit from domestic production. That was an increase of 104.5 percent from a year earlier.

Including the production from overseas plants, sales jumped 11.7 percent from 2008 to 3.11 million cars worth 53.29 trillion won, also the highest on record, the company said.

“As the automakers all around the world suffered severely from the economic crisis, Hyundai Motor turned the crisis into an opportunity by expanding the market share,” said the company in a statement. Its global market share rose by 0.9 percentage points last year to 5.2 percent with the market share in the United States and China jumping by 1.2 percentage points and 1.4 percentage points to 4.2 percent and 6.9 percent, respectively. The domestic market share rose by one percentage point to 50.5 percent.

Analysts attributed the sizable growth to the weak won, which increased price competitiveness overseas. Last year, the won fell 15.2 percent against the dollar and 10.1 percent against the euro. The government’s temporary tax aid for purchasing cars last year implemented as part of the expansionary policy also helped, they said. The taxes levied on new vehicle purchases were cut 70 percent from May to December in return for replacing old gas guzzlers.

Hyundai Motor’s Chief Financial Officer Lee Won-hee said that the company aims to sell 3.46 million cars this year, up 11.4 percent from last year. The target global market share this year is 5.4 percent, he said.

Seo Seong-mun, an analyst at Korea Investment and Securities, said the recent struggles by Toyota could help Hyundai sell cars globally this year. Toyota recalled 5.9 million cars in the U.S. market due to technology glitches. “The zero-defect image of Toyota, which was a key to its growth, is now being hurt seriously,” said Seo.

Kim Kyeong-yeon, a researcher at LG Economic Research Institute, however, said it could be difficult for Hyundai to be as successful this year as last year because of a strengthening won and uncertainty regarding the global economic recovery. He advised the group see further into the future.

“Electric-car manufacturing technologies at Hyundai are less than half as advanced as those at Toyota,” said Kim. “Hyundai has a desire to develop electric cars, but it’s difficult to catch up with rivals that have long developed related technologies in a short time.” Hyundai plans to invest 4.45 trillion won in electric cars over the next four years.

By Moon Gwang-lip [joe@joongang.co.kr]

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