Sales of South Korean car giant Hyundai Motor for the first quarter were disappointing, plunging 44 percent to hit its lowest in 10 years as the ongoing pandemic impacted demand for cars globally, the company announced Thursday.
Hyundai Motor's net profit for January to March was 463 billion won ($376 million), way below Refinitiv's average projection of 607 billion won taken from 15 market observers.
Vehicle demand dropped more than 40 percent in March globally as a result of the current coronavirus crisis, and far bigger compared to an average 24 percent on-year retreat in demand for the first three months this year, following supply distortions and unabated worries, Hyundai Senior Vice President Koo Za-yong disclosed in a conference call after the release of Hyundai's sales results.
As the pandemic forced countries to impose lockdowns and other social distancing measures, consumer demand started to crumble in January. The first demand downturn was noted in China, then it occurred in South Korea and from then in the US and Europe starting in March.
Hyundai's operating profit, as a result, fell 5 percent to 864 billion won from the same month in the previous year, on a 6 percent dip in revenue.
The company said it estimated vehicle sales to decline further in the next three months and incur weak profitability because of the cancellation of overseas facilities and dealerships in key markets.
To cushion falling overseas revenues, Hyundai said it will concentrate on hiking sales of its latest models, like the Genesis G80 sedan, Genesis GV80 sport utility vehicle, and Avante compact in the local market.
In terms of liquidity concerns, the company will not have financial troubles until end of 2020 as Hyundai has 11 trillion won in its cash registers, Hyundai Senior Vice President Koo Za-yong divulged.
Meanwhile, Hyundai's local production was up 98 percent of its capacity late last month, Reuters reported, part of a wager that there would be more demand in the U.S.
According to company document seen by Reuters, Hyundai delivered 33,990 cars to the US in March, an increase of 4.3 percent compared to March the previous year. But with many parts of the US still under stay-at-home orders due to the pandemic, US car sales dropped.
This is the reason why many Hyundai vehicles are now forced to sit idly in ports, and the company's dealers are not -- at the moment, obviously -- interested in taking shipment of too much inventory.
