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Hyundai Notes Highest Quarterly Profit Growth In 7 Years, Plans Higher US Market Share

Hyundai Notes Highest Quarterly Profit Growth In 7 Years, Plans Higher US Market Share
South Korea's auto giant Hyundai Motor Co will bring in an expanded line-up of sport-utility vehicles (SUV) to rejuvenate its business prospects in the United States even as the company reported a second quarter profit that was highest quarter on quarter growth in over seven years.
The company announced that the by the end of the current year, it would be able to increase its market share in the US to 4.2 per cent compared to 3.9 per cent at the end of last year. The company is pinning its hopes on the sale of upgraded Palisade SUV which is slated to hit the market in the second half of the current year. On a long term basis, the company aims to capture a 5.2 per cent of the US market by 2023.
A slowdown in demand and sale in China was offset by the company’s good performance in its own home country as well as in the United States in the last quarter ending June. The company’s prospects, like all other major auto companies, have been hit in China because of a slowing domestic economy, a lingering trade war with the US as well as a dearth of competitive models. These factors forced the company earlier this year to suspend production at its oldest factory in the country.
The plan for gaining more market share in the United States for Hyundai will include an increase in the proportion of SUVs it would offer to its US consumers to up to 67 per cent by 2023 from about 51 per cent in 2019. The company said that this is in response to a change in consumer taste.
"It was a surprise when Hyundai revealed an aggressive U.S. turnaround plan, but I don't see any problem in it meeting its annual sales target there," said analyst Kim Joon-sung at Meritz Securities.
Hyundai had been incurring profit decline for six consecutive years and this turnaround in the fortunes of the company is being headed by its heir-apparent Euisun Chung. There were reports that the executive vice chairman is looking out for support from its major investors in order to reconsider and review an old ownership restructuring plan while he also gets ready to get into the shoes of his 81-year-old father and the current chairman of the company.
Shareholder opposition had earlier forced the company to scrap a proposal last year. The proposal was mainly opposed by US hedge fund Elliott Management Corp.
The company which had traditionally been dominated by Koreans, had seen a massive influx of foreign executives by Chung since last year.
The sale of the company in the US increased by 3 per cent in the April-June period while the amount of money repatriated to South Korea was raise d in value because of a weak Korean won against the US dollar. In South Korea, the sale of the company jumped by 8.1 per cent driven by strong performance of new models such as the Palisade SUV and Sonata sedan.

Christopher J. Mitchell

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