Hyundai Motor net profit plummets 67%

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Hyundai Motor net profit plummets 67%

Hyundai Motor’s operating profit plummeted 76 percent on-year in the third quarter as a recall in the U.S. and sluggish growth in major markets hurt the automaker’s bottom line.

Korea’s No. 1 carmaker by sales announced Thursday that it posted 289 billion won in operating profit in the July-Sept. period.

Its net profit was 306 billion won, down 67.4 percent on-year.

“To fortify quality control, Hyundai Motor rolled out a recall related to airbags and engines which resulted in a 500 billion won one-time cost realized in the Q3 report,” said a Hyundai Motor official.

Operating costs totaled 3.4 trillion won in the third quarter, according to the carmaker, which is 8.6 percent more than during the same period last year.

Despite good sales in Europe and emerging markets like Brazil and Russia, low demand in the U.S. and China dragged down overall sales. It sold 1.12 million units globally in the third quarter, 0.5 percent less than during the same period last year.

The domestic market got a bost from the new Santa Fe SUV, but a decreased number of operating days at dealerships resulted in Hyundai Motor selling just 171,443 units, a 1.4 percent drop compared to last year. Chinese sales dropped by 3.7 percent on-year, selling 181,000 units. Sales in the U.S. dropped by 4.1 percent on-year to 302,000 units.

Hyundai Motor expects profitability to improve in the fourth quarter and going into next year with the launch of new SUV models and a reduction in costs.

“In the fourth quarter, the new Santa Fe SUV and an upgraded Tucson SUV will launch in the U.S.,” said a Hyundai Motor official.

“The implementation of a new platform starting next year will help reduce costs and raise efficiency as well.”

Hyundai Motor shares fell by 5.98 percent to 110,000 won on Thursday as of press time.

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