Hyundai Motor Co. said Thursday its third-quarter net profit fell 16 percent, due mainly to sharp declines in China sales amid a diplomatic row over the deployment of a U.S. advanced missile shield system here.
In the July-September quarter, Hyundai Motor's net profit fell to 939.2 billion won (US$835 million) from 1.12 trillion won a year earlier, the company said in a statement.
The number of vehicles sold in China plummeted 27 percent to 188,000 in the third quarter from 256,000 units a year earlier. The figures were hurt by local boycotts of South Korean products amid political tensions between Seoul and Beijing over the deployment of the missile defense system, called THAAD, in South Korea.
Seoul has said the THAAD system is purely aimed at deterring missile threats from North Korea, but Beijing has argued it could spy on its military.
Weak sales in the United States also weighed on the quarterly results. Hyundai saw its units sold in the U.S. also fall 27 percent to 75,000 from 103,000 autos over the same period.
In a conference call held after the earnings release, Hyundai executives expressed expectations of tougher competition with rivals in major markets such as China and the U.S., due to increased inventory and marketing costs.
"To revive sales, the company will gradually launch new models such as the Kona subcompact SUV and the Genesis G70 sedan in the U.S. from later this year," said Executive Vice President Choi Byung-chul, who is in charge of Hyundai's financial and accounting division.
In China, Hyundai will make utmost efforts to "jumpstart" sales by launching a wide range of customized models, including seven new cars to be introduced for local customers by 2022, Vice President Koo Za-yong said.
As for preparations in case of amendments in the free trade agreement with the U.S., Choi said, "We will be closely monitoring developments in the upcoming renegotations between Seoul and Washington, while strengthening product competitiveness and brand awareness in global markets."
Operating profit rose 13 percent to 1.2 trillion won in the third quarter from 1.07 trillion won a year earlier. Sales were up 9.6 percent to 24.20 trillion won from 22.08 trillion won during the same period, the statement said.
Hyundai Motor stocks jumped 7.41 percent to 159,500 won on hopes that the company has hit the bottom in China sales. Seoul and Beijing are reportedly working to resolve the diplomatic standoff. The broader KOSPI ended down 0.47 percent.
Still, analysts didn't expect any meaningful rebound in the carmaker's performance in China and the U.S. this year since it lacks the competitive SUV models that are in rising demand, among others.
In the January-September period, Hyundai Motor's cumulative net profit fell 30 percent to 3.259 trillion won from 4.650 trillion won a year earlier. Operating profit declined 8.9 percent year-on-year to 3.799 trillion won on sales of 71.875 trillion won, which marks a 4 percent on-year rise.
Meanwhile, Hyundai Motor Group, which includes Kia Motors Corp., plans to give more autonomy to its operations in major markets to help them better compete with rivals by quickly responding to market demands and changes.
The world's fifth-largest auto group, long known for its top-down management style, will introduce the "autonomy-based management program" in the U.S. and India next year, with its affiliate Kia Motors aiming to introduce it in its major markets starting with the U.S. next year.