Hyundai unveils 10.5 trillion won spending plan as EVs rise

HYUNDAI Motor Company will invest 10.5 trillion won (S$11.2 billion) over the course of 2023, based on an exchange filing on Thursday (Jan 26), as it moves to electrify more of its fleet to meet rising consumer demand for greener cars.

The South Korean carmaker is also targeting a revenue growth of 11.5 per cent this year, after posting fourth-quarter earnings that beat analyst estimates. In an unusual move for the company, it increased dividends as well.

Earlier this month, the maker of Tucson sports-utility vehicles (SUVs), Sonata sedans and Ioniq electric vehicles (EVs) said it aimed to sell 4.3 million cars globally this year, or about 10 per cent more than last year.

Its affiliate Kia, which makes the Sportage SUV and the Carnival people-mover, is also targeting a 10 per cent growth for 2023 for a total of 3.2 million vehicles.

Combined, Hyundai and Kia rank as the world’s third-largest carmaker, behind Toyota and Volkswagen.

Car manufacturers from Tesla to Volkswagen are boosting production as well, with Elon Musk’s EV pioneer planning to increase output “as quickly as possible” after better-than-expected profits, it said on Wednesday. 

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Toyota, meanwhile, forecast earlier this month that its vehicle production will exceed pre-pandemic levels. It expected an output of as many as 10.6 million cars this year. Volkswagen predicted that existing orders will boost its sales in 2023.

On Thursday, Hyundai also raised its cash dividend to 3.8 per cent for holders of its common stock, and 7.6 per cent for preferred shareholders. The payout for 2023 would be similar or higher than that for 2022, it said.

The Seoul-based company’s operating profit for the three months ended Dec 31 more than doubled to 3.4 trillion won from a year earlier. That topped the 3.1 trillion won average analyst estimate, data compiled by Bloomberg showed.

Its quarterly sales jumped to 38.5 trillion won, up 24 per cent from the previous year.

In North America, Hyundai’s sales rose 20.9 per cent in the fourth quarter. However, there are concerns over US President Joe Biden’s climate and energy bill, which requires carmakers to assemble their EVs in the country in order to qualify for tax credits.

Hyundai and Kia said the law put them at a disadvantage, as they do not have any EV plants in the US.

Hyundai’s sales in China for the three-month period slumped 19 per cent, while those in Europe were little changed.

The company is also grappling with its Russian operations, which halted in early 2022 following President Vladimir Putin’s invasion of Ukraine. Its sales in Russia plunged 65 per cent last quarter; it used to obtain 4 per cent of its global output there. BLOOMBERG