• Hyundai and Kia posted solid 2Q24 results that were ahead of Bloomberg consensus estimates and left their FY24 financial guidance unchanged. Automotive operating profit margins remained double-digits at both companies, although Hyundai’s margins were adversely impacted in the quarter by higher warranty expenses. Eco-friendly vehicle sales accounted for a healthy share of total unit wholesales in 2Q24 for both Hyundai (18%) and Kia (21%), although sales of hybrids continued to grow for both companies during the quarter while Hyundai’s EV sales declined YoY. Management teams at both Hyundai and Kia have stated hybrid vehicles generate double-digit profit margins that are “not that different” from ICE vehicle margins, while its EVs are profitable but generate low-single-digit margins.

 

Hyundai and Kia posted solid 2Q24 results that were ahead of Bloomberg consensus estimates. Automotive operating profit margins remained double-digits at both companies despite Hyundai’s margins were adversely impacted in the quarter by higher warranty expenses. Eco-friendly vehicle sales accounted for a healthy share of total unit wholesales in 2Q24 for both Hyundai (18%) and Kia (21%), although sales of hybrids continued to grow for both companies during the quarter while Hyundai’s EV sales declined YoY.

• FY24 guidance includes wholesale volume growth of less than 1% to 4.24 mn units. Revenue is projected to increase 4%-5% based primarily on growth in North American sales volumes and higher average selling prices (ASPs). Operating profit margins are expected to moderate based on limited industry demand growth, intensifying competition, higher sales incentives, and increased labor costs.
• For 2H24, management expects challenging market conditions will make it difficult to achieve sales growth in most markets except the U.S., which it expects to be characterized by continued strong performance and favorable exchange rates. Additional color will be provided during its 2024 CEO Investor Day at the end of August at which they will announce their short-term and long-term business strategies and financial goals.