Hyundai says sales may return to pre-Covid levels in 2022

Hyundai Motor Co. is hopeful the semiconductor shortage afflicting the global auto industry will ease next quarter and that its sales will return to pre-pandemic levels this year, according to the company’s executive vice president, Gang Hyun Seo.

Speaking in a call following Hyundai’s quarterly earnings, which missed analyst expectations, Gang said the chip crunch would likely continue until the end of the current quarter and then production could normalise after.

Hyundai said earlier Tuesday that operating profit in the three months through December fell 6.8 per cent from a year earlier to 1.53 trillion won ($1.28 billion), lower than the 1.79 trillion won average estimate of analysts tracked by Bloomberg. Its operating margin for 2021 was 5.7 per cent.

Consolidated net income slid 57 per cent to 546 billion won, far below the 1.47 trillion won estimate as taxes weighed.

Sales, however, totaled 31 trillion won, up 6.1 per cent and marginally higher than estimates thanks to a weaker Korean won and sales of value-added products.

Hyundai shares fell as much as 3.6 per cent, the most since October 1. They pared the loss to close down 1.3 per cent.

The company’s global retail sales declined 15 per cent last quarter, with a slump of 43 per cent in China. South Korea and North America sales fell 8.9 per cent and 7.9 per cent, respectively. Europe was an outlier with a 7 per cent increase.

Hyundai aims to sell 4.32 million vehicles this year, including a 30 per cent increase in eco-friendly cars. They will account for up to 40 per cent of sales in Europe versus 32 per cent in 2021, the company said. Its new Ioniq 6 electric-car will be released in South Korea in the first half.

Pyoung-Mo Kim, an analyst at Seoul-based DB Financial Investment, said prior to the results that a return to normal production for Hyundai could be delayed to late this year as chipmakers such as Taiwan Semiconductor Manufacturing Co. may raise prices.

In addition to supply-chain snags, higher commodity prices have been a burden. Hyundai said in November that cost of iron ore in the third quarter jumped 63 per cent from a year earlier to $165 a tonne, while aluminum rose 40 per cent to $2,384 a ton, and copper climbed 48 per cent to $9,188.

Hyundai’s share of the global EV market is estimated to be 5.7 per cent based on sales from January to November in 2021, according to data from Seoul-based Hana Financial Investment.