Hyundai Motor and its affiliate Kia, South Korea’s two biggest carmakers, on Thursday reported strong second-quarter earnings on a base effect and strong sales of their high-end SUVs.
Hyundai’s net profit for the three months that ended in June jumped to 1.98 trillion won ($1.7 billion) from 377.27 billion won in the same period last year, the company said in a statement.
The strong result was helped by last year’s low base effect from the COVID-19 pandemic and robust demand for Hyundai’s high-margin SUV models that helped offset output disruptions by chip shortages, according to Seo Gang-Hyun, an executive in charge of the company’s finance and accounting division.
“Faced with worsening chip shortages in May and June, Hyundai was quick to change vehicles in production and lineups to minimize the impact from the parts problems. Such efforts allowed the company to navigate the chip shortage better than other carmakers,” he said.
A combination of its improved product mix, lower incentives, and higher average selling prices, particularly in the world’s most important U.S. market, also helped boost the quarterly profits, Hyundai said.
Looking ahead, the company expected prolonged component supply issues, rising raw material prices, and weak emerging market currencies to continue to weigh on earnings results in the third quarter, reports the Yonhap news agency.
The shortage in auto chips is expected to gradually improve from the third quarter, Hyundai said, adding it will seek partnerships with local chipmakers to reduce its reliance on foreign supplies.
Analysts said the chip supply issues will ease later this year given the recent forecast of improved supply by major supplier Taiwan Semiconductor Manufacturing Co. (TSMC).
To prop up sales in the second half, Hyundai plans to launch the GV70 SUV, the all-electric G80 sedan, its pure-electric IONIQ 5 crossover utility vehicle, and the Santa Cruz pickup truck in the U.S. market.
In the first six months, Hyundai and Kia, which together form the world’s fifth-largest carmaker by sales, sold a combined 3.47 million vehicles, up 25 percent from 2.77 million units in the same period of last year.
They aim to sell a total of 7.08 million autos this year, 1.7 percent lower than the 7.2 million units they sold last year.