Seoul: Hyundai Motor Co., South Korea's leading automaker, announced on Thursday that its net profit for 2024 rose by 7.8 percent from the previous year, primarily driven by increased global demand for eco-friendly vehicles. Net profit amounted to 13.22 trillion won (US$9.2 billion) on a consolidated basis last year, compared to 12.27 trillion won in 2023, as reported in a regulatory filing.
According to Yonhap News Agency, the company's operating income for the year dropped by 5.9 percent on-year to 14.23 trillion won, while annual sales saw an increase of 7.7 percent, reaching a record 175.23 trillion won. The decline in operating profit was attributed to the depreciation of the South Korean won against the U.S. dollar, which led to an increase in sales warranty provisions. These provisions impact corporate earnings by reducing profit and increasing expenses when warranty claims are made.
In the fourth quarter, Hyundai Motor's net profit totaled 2.47 trillion won, marking a 12.3 percent on-year increase. However, operating profit fell by 17.2 percent to 2.82 trillion won, while sales rose 11.9 percent to 46.62 trillion won. The company reported that it sold 757,191 eco-friendly cars globally last year, reflecting an 8.9 percent on-year increase, including 218,500 electric vehicles (EVs) and 496,780 hybrid EVs.
Hyundai Motor's total vehicle sales last year reached 4,141,959 units, with 1,066,239 units sold in the fourth quarter. Despite a 4.6 percent decline in domestic sales to 189,405 units in the fourth quarter, global sales decreased by 1.6 percent on-year to 876,834 units. Notably, sales in North America grew by 4.4 percent to 294,383 units. For the October-December period, global sales of eco-friendly vehicles totaled 209,641 units, up 21 percent on-year, driven by an expanded hybrid lineup and increased sales of SUV hybrids in the North American market.
Looking ahead, Hyundai Motor has set an annual sales target of 4.17 million units for 2025, with plans for a 3-4 percent on-year increase in consolidated sales and an operating profit margin of 7-8 percent this year. The company anticipates a challenging business environment due to factors such as slowing growth in major markets, the so-called EV chasm, and changes in industry development pace. To address these challenges, Hyundai Motor plans to develop and implement systematic response measures for each internal division, analyze complex business risks, undertake bold innovations, and perform in-depth evaluations to enhance future competitiveness.
In a recent investors' conference call, Hyundai Motor disclosed details of its cooperation with U.S. auto giant General Motors Co. (GM). The two companies signed a memorandum of understanding in September for joint production of passenger and commercial vehicles, and the development of eco-friendly energy technologies. Lee Seung-jo, head of Hyundai's finance division, mentioned a potential rebadging strategy to supply GM with commercial EVs and expressed a strong consensus to collaborate on passenger vehicles.
Additionally, Hyundai Motor projected that the subsidy program under the Inflation Reduction Act (IRA) in the U.S. will remain effective for some time. Despite discussions about reducing or eliminating IRA subsidies, the company believes that repealing the IRA would require Congressional approval, which is unlikely to occur quickly. Therefore, the IRA subsidies are expected to stay in place throughout this year.