Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hyundai Motor Co (HYMTF, Financial) reported a 4.7% year-on-year increase in revenue to KRW43 trillion for Q3 2024.
- North American sales saw a significant increase of 9.3%, driven by strong demand for high-margin vehicles.
- Hybrid vehicle sales increased by 45.4% year-on-year, with notable growth in the US and Europe.
- Hyundai Capital's operating profit increased by 13.6% year-on-year, supported by strong asset growth and improved returns.
- The company maintained a strong operating margin of 8.3% despite challenging market conditions.
Negative Points
- Global wholesale and retail sales decreased by 3.2% and 3.1% year-on-year, respectively.
- Operating profit decreased by 6.5% year-on-year to KRW3.6 trillion, impacted by increased incentives and SG&A expenses.
- EV sales declined by 8.1% due to weakened demand, despite a recovery from the first half of the year.
- The company faced a one-time warranty cost of KRW319 billion due to a proactive warranty extension for the GRAND SANTA FE in the US.
- Sales in Europe decreased by 9.5% on a wholesale basis, attributed to weaker demand for EVs.
Q & A Highlights
Q: Can you explain the reasoning behind the one-time provisioning for warranty extensions, and why there hasn't been any recall news?
A: The provisioning was a proactive measure for the GRAND SANTA FE models sold in North America, due to high usage of towing by US consumers, which stresses the engine. The warranty was extended from 10 years/100,000 miles to 15 years/150,000 miles. This was not a recall but a preemptive action to maintain customer trust and quality standards.
Q: How does Hyundai handle R&D costs and patents when collaborating with partners like GM and Waymo?
A: Hyundai and Kia share R&D functions and costs, but patents developed are held separately. Collaborations with partners like GM and Waymo are managed to ensure that any profits or technologies developed are solely attributed to Hyundai, without interference from Kia.
Q: What are the details regarding the Metaplant operation in the US and the pricing strategy for the IONIQ 5?
A: The Metaplant began operations on October 3, 2024, and is currently in the ramp-up phase. The pricing for the IONIQ 5 is still under consideration, factoring in raw material and battery costs, with a focus on competitiveness. Incentives from the Metaplant will enhance sales efficiency starting next year.
Q: Will the Lambda engine issue affect other models, and what is the outlook for Hyundai's operating profit amid a challenging environment?
A: The Lambda engine issue is specific to the GRAND SANTA FE due to user characteristics, not the engine itself. Hyundai aims to maintain an operating profit margin of 8% to 9% despite market challenges, focusing on sales efforts and cost management.
Q: How does Hyundai view the profitability of hybrid vehicles compared to ICE vehicles, and what are the trends in material costs?
A: Hybrid vehicles are achieving strong sales and profitability, with some models exceeding the overall operating profit margin. Hyundai is actively working to reduce material costs and expects to continue this trend into next year, despite potential increases in processing costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
