Hyundai Motor quarterly profit plunges 68% on recall costs

Airbag and engine-related recalls in the US take heavy toll on profit

Photograph: Regis Duvignau/Reuters

Photograph: Regis Duvignau/Reuters

 

Hyundai Motor posted a 68 per cent plunge in quarterly net profit, missing an analyst consensus by a large margin as US recall costs weighed.

Shares in the automaker tumbled as much as 10 per cent.

The South Korean automaker has had to grapple with costs stemming from airbag and engine-related recalls in the United States. A US safety group this month called for an expansion of the engine recall, citing a surge in fire complaints.

Third-quarter net profit came in at 269 billion won (€206.9 million), compared with 852 billion won booked in the same period a year earlier.

That missed a SmartEstimate of 831 billion won, according to Refinitiv data.

Operating profit slumped 76 per cent to 289 billion won in the quarter while sales rose 1 per cent to 24.43 trillion won.

Hyundai had been counting on its new Santa Fe SUV to turn around its flagging fortunes in the United States where it had missed out on a SUV boom due to its heavy reliance on sedans.

But its US retail sales rose only 1 per cent in the third quarter from a year earlier. And in China, Hyundai saw sales declines despite an agreement between Seoul and Beijing to normalise ties, putting a diplomatic row that had hit sales of South Korean goods behind them.

Hyundai is also bracing for a decision from the United States as to whether it will slap tariffs on imports of vehicles and vehicle parts.

South Korea has argued it should get tariff exemptions, saying it has already made concessions in the auto sector after a bilateral deal was revised last month. – Reuters