SEOUL -- Hyundai Motor posted its ninth straight quarterly profit drop as it trailed rivals in tapping soaring demand for SUVs in China, its biggest market.
The Korean automaker today posted a net profit of 1.69 trillion won ($1.47 billion) for the first quarter, down 12 percent from the year-ago quarter. Operating profit declined 16 percent to 1.34 trillion won, while revenue rose 7 percent to 22.35 trillion won.
Hyundai's strength in smaller, fuel-efficient sedans helped the automaker outperform the industry during the global economic downturn, but has left it reeling from a consumer shift to SUVs in recent years.
Global sales declined 6 percent to 1.1 million vehicles in the first quarter. In China, Hyundai's first-quarter vehicle sales fell 10 percent despite the country's tax cuts on small car purchases, as Chinese local rivals such as Great Wall Motor offered cheaper SUVs.
Hyundai, together with affiliate Kia, has the highest sales exposure among major automakers to emerging markets, including China, Russia and Brazil, making them vulnerable to a slowdown in those markets, according to Macquarie Securities.
Hyundai said in a statement: "Emerging market downturn as a result of low oil price has decreased exports from domestic factories while the value of emerging markets like Russia and Brazil declined, offsetting the impact of the weaker South Korean won."
In the U.S. market, where appetite for SUVs and trucks has been strong, Hyundai posted a 1 percent sales rise in the first quarter, weighed down by its sedan-heavy lineup. Strong demand for large SUVs and trucks in North America helped General Motors post bigger-than-expected profits for the first quarter.
Hyundai said it will aim to gradually improve earnings by launching its Elantra sedans and boosting SUV supply in the U.S. and China markets.
Hyundai needs to build its fourth and fifth factories in China because of its sustained growth, Hyundai Chief Financial Officer Choi Byung-chul said today in an earnings conference call. His comments come amid concerns about slowing growth and rising competition in the world's biggest auto market.
"The biggest challenge facing Hyundai is securing its competitiveness in China and maintaining its market share there," said Kim Sung-soo, a fund manager at LS Asset Management.