By on July 24, 2009

No big deal. Just $650m net income over the last three months. That’s almost double what analysts expected, and comes despite an 11 percent drop in global sales (not including affiliates). Hyundai’s worldwide market share hit five percent for the first time though, with US share up over 1 percent in the last year. 56 percent sales growth in China didn’t hurt either. Forget the Genesis, Hyundai’s financial news is going to be what stirs up the competitors’ boardrooms.

However, Bloomberg reports that “operating profit, or sales minus the cost of goods sold and administrative expenses, fell 0.8 percent to 657.3 billion won [a mere $527m] after boosting marketing spending… To lure customers into its showrooms, the automaker spent 6 percent of its revenue on marketing during the first half, up from 2.8 percent in the same period last year.”

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44 Comments on “Hyundai Records Record Profit...”


  • avatar
    brettc

    It’s weird how a company that’s been trying very hard for years to prove themselves with nice looking vehicles, excellent warranty coverage and decent service departments would do well. It’d be craziness if GM or Chrysler learned something from their success. It seems that Hyundai is turning into what Toyota was back about 10-20 years ago.

  • avatar

    US share up one per cent, or one percentage point? 4% to 5%, e.g. is one percentage point. 4% to 4.04% is one per cent.

    Hyundai is doing gangbusters, and power to them. They make some great cars now, and they are selling them at very attractive prices. It is not embarrassing to drive a Hyundai anymore.

  • avatar
    superbadd75

    I got a look at a new Kia Optima today and was rather impressed. It’s a world apart from the garbage they were turning out just 5 or 6 years ago. Hyundai is really coming into their own, and they deserve to do well. They’re earning their way by building good products and backing them with an incredible warranty. As brettc said, GM and Chrysler should take some notes. Begging for handouts doesn’t do it. Hyundai has come a very long way in a short time, and they’re the car company to watch.

  • avatar

    At a tepid 1,800 sales last month the Genesis isn’t going to stir up any boardrooms.

    But Hyundai’s profit and overall marketshare climb should.

  • avatar
    rpiotr01

    Yup, limited and focused line-up, attractive, sensible pricing, noticeable improvement in quality. Good formula, and good for them. What else can you say?

  • avatar
    Jeff Puthuff

    1,800 Genesises in a horrible market from a manuf. not usually considered for near luxury autos is damned impressive. 1,800 is nearly one third of all of Infiniti’s June sales.

  • avatar
    Edward Niedermeyer

    photojim: Hyundai “took 4.3 percent of the U.S. light vehicle market in the first half, compared with 3.1 percent a year earlier” per the linked story.

  • avatar
    klossfam

    It’s the little things as well…like the dash on a new Elantra being softer touch and better quality than my $38K Toyota Highlander. Even when Hyundai has to cut cost i.e. plastic “aluminum” in the Genesis Coupe – it is very well done. Their fit and finish exceeds all the US brands and even betters some of the Japanese brands in many instances.

    I’ve driven a lot of their new products and the first impression they give really helps them move some iron. Our local Hyundai dealer is so busy you need to make an appointment…Saturday mornings are absolute bedlam at this dealer and I’m in Upstate NY aka not an economic revival area. They are definitely doing several things right…

  • avatar
    vandstra

    How much of this is a result of their “You lose your job we’ll take back the car” promise?

    Will that come back to bite them in the ass?

  • avatar
    Juniper

    Hyundai is doing great and has a bright future.
    However, in the Bloomberg article their operating profit actually dropped. Not much, but it dropped. So I don’t know where this net profit gain came from. Did they have a big write off last year? Or get their Chairman out of jail?
    Oh, and TTAC, you should have caught that and published it.

  • avatar
    romanjetfighter

    klossfam: I think that has more to do with declining Toyota quality.

    Ever feel the interior grab handles of a Camry? Hollow plastic that wiggles if your grasp is firm. This is a 30k top of the line XLE. You can see the little seams of the plastic parts when they casted them, too. Everything’s misaligned, and even the seat fabric is uneven on the seat foam.

    Meanwhile, Hyundai Sonata’s interior is Lexus-lite, and while a bit ugly on the outside and cramped, has pleasant feeling plastics and good quality.

  • avatar
    BlueEr03

    What is that car in the picture?? I want it!

  • avatar
    BDB

    Hyundai has the best marketing of any volume brand out there right now, full stop.

  • avatar
    davejay

    The last automotive consulting job I had involved a web site to help Hyundai employees do data entry; specifically, to take log entries they’d kept in new Hyundais they were using as daily drivers, with a stated goal of discovering the specific problems (great and small) their products were having in the first year of ownership. There was a lot of pressure on the participants to report every little detail.

    It’s about five years later, and I have no doubt that this straightforward little program of theirs — and the steps they’ve taken to fix discovered issues — is the reason the quality is up (esp. on the JD Power surveys.) Funny how a simply process like “keep track of things that break and make sure they stop breaking” can generate such dividends.

  • avatar
    Edward Niedermeyer

    Juniper: text amended.

    BlueEr03: Hyundai’s Veloster concept. It supposedly previews the look of the new Tiburon which debuts this fall in Frankfurt.

  • avatar
    cory02

    The Hyundai dealers in my area seem to have the most new cars on their lot of any dealers. One of them also has a 98 Elantra with 500,000 miles in their showroom. One of the more effective bits of automotive advertising I’ve seen.

  • avatar
    dwford

    I think that has more to do with declining Toyota quality.

    Ever feel the interior grab handles of a Camry? Hollow plastic that wiggles if your grasp is firm. This is a 30k top of the line XLE. You can see the little seams of the plastic parts when they casted them, too. Everything’s misaligned, and even the seat fabric is uneven on the seat foam.

    Meanwhile, Hyundai Sonata’s interior is Lexus-lite, and while a bit ugly on the outside and cramped, has pleasant feeling plastics and good quality.

    Exactly. Honda and Toyota are really cutting back on the quality of the materials in their interiors.

  • avatar
    windswords

    “It’d be craziness if GM or Chrysler learned something from their success. It seems that Hyundai is turning into what Toyota was back about 10-20 years ago.”

    Hyundai is doing what Chrysler was doing 15 years ago. Nice new product and long warranty (at that time 3/36 b2b adn 7/70 powertrain). I’d just like to see Chrysler get back to what they were pre_Dumbler and I’d be happy.

  • avatar
    lw

    If you want the absolute best car at a great price you need to go for a car company that is mature and working like hell to establish significant market share.

    Toyota was this way in the 80s.. Same with Honda…

    Now Toyota and Honda can relax the fit and finish and still maintain market share for years which maximizes profit.

    GM did the same thing.. Works for awhile.

  • avatar
    BDB

    Chrysler knows success, they just don’t know how to sustain it. They were really hot several times (the latest being the ’90s) but always crashed and burned. As little as eight years ago, they were the design leader in North America! And now the make the Sebring!

    Ford is beginning to know success (for the first time in a long time), all they need is a better economy.

    GM? I don’t know. I think the fact they didn’t already have a near-death experience in the early 80s like Ford and Chrysler did puts them at a disadvantage.

  • avatar
    Runfromcheney

    BDB:
    Chrysler and Ford were powerhouses back in the 90s. Ford threw away their success during the term of Jacques Nasser as he wasted their entire cash pile on building a luxury car conglomerate and making a bunch of investments in dot com companies. As the dot-com bubble burst and all those organizations went down the crapper, they took Ford with them. Thats why the Ford family didn’t waste a minute in canning him.

    As for Chrysler, we all know the reason why they went from being a powerhouse to the weakling of the American auto industry.

    Just in case your forgot, GM faced certain death in the early 90s as the result from all the idiotic management from Roger Smith. The SUV craze saved them by a lucky whim.

  • avatar
    Matt51

    Kia Forte and Soul are best value in the market. Hyundai is no 1. Not in volume, but Hyundai is to Toyonda, what Toyonda was to GM.

  • avatar
    BDB

    Just in case your forgot, GM faced certain death in the early 90s as the result from all the idiotic management from Roger Smith. The SUV craze saved them by a lucky whim.

    Was it really as bad as Chrysler and Ford in the early ’80s though? I only know these things from the history books but I always got the impression that GM was slowly, slowly going under in the early ’90s, while Chrysler and Ford in the early ’80s were about to croak immediately.

    Even with the SUV craze, GM seems like they were a little late to the party. Chrysler had the Cherokee, Ford had the Explorer, but the Chevy Blazer wasn’t as nearly as good as either, I think.

  • avatar
    paulie

    Jeff Puthuff

    Confused here….again.

    What is all the praise about?
    If I am reading this report correctly, they LOST margin.

    And perhaps the Genesis had something to do with this loss.
    The tremendous increase in marketing is doing the job, but a loss is a loss.

  • avatar
    Jeff Puthuff

    Paulie, they made a relatively big profit. They introduced a big gamble (for them, anyways) just as the US new car market collapsed and yet sold 1,838 of them in June.

    I don’t understand why you say “a loss is a loss.” They had a record quarter; blasted past analysts’ estimates; sales in China are rising so fast, they’ve had to adjust sales forecasts upwards twice this year. The analyst in the linked story was quoted as saying, “Hyundai boosted profit and expanded market share worldwide as peers faltered.” You consider that a loss?

    Color me confused.

    I’m no Hyundai fanboy, but I recognize a bright spot here.

  • avatar
    cory02

    Kia Forte and Soul are best value in the market.

    Kia Forte EX with the fuel economy package gets 36 MPG on the highway for a sticker price of $18k. Tremendous value for what seems like at least a decent car.

  • avatar
    WetWilly

    Hyundai’s other shoe(s) haven’t even dropped yet:

    1) Between its looks and the direct injected base engine, the new Sonata will be yet another game changer for Hyundai; on top of that, a new Tucson, Accent, Elantra, Tiburon, and the Equus are all coming within two years. That’s not even counting what is happening over at Kia, who will have a completely new lineup within two years.

    2) Imagine what the next generation Genesis line is going to look like. Direct injection is virtually guaranteed for the Lambda V6 and Tau V8; as for the Tau, they’ve repeatedly mentioned a 5.0 version and they already have a supercharged 4.6 Tau putting out 460hp. Thanks to the presence of the new DI engines (e.g. the 1.6 estimated at 140hp) and the eco Blue-versioned Accents, Elantras, and hybrid Sonatas, Hyundai will have enough CAFE headroom to actually offer high output Tau varieties. While people think Hyundai can’t sell an Equus for over $50K, an Equus offered with a 5.0 supercharged Tau would very likely bump that price ceiling higher.

    3) Hyundai has started paying attention to one of its weak points – suspensions. There’s already a rumored refresh on the 2010 Genesis Sedan’s suspension.

    IOW, if I were an axed Chrysler dealership I’d be angling to pick up a Hyundai franchise ASAP.

  • avatar
    th009

    Matt51: Kia Forte and Soul are best value in the market. Hyundai is no 1.

    Note that Hyundai only owns a (large) minority share in Kia — the financial results Hyundai published were for Hyundai only, not Hyundai+Kia. They have lots of influence, but not full control.

  • avatar
    Gardiner Westbound

    The job can’t be finished only improved to please the customer. – W. Edwards Deming

  • avatar
    jpcavanaugh

    BDB: You are correct. Both Chrysler and Ford were in dire shape in 1980-82, both losing massive amounts of market share. GM got through this period pretty much unscathed. In fact, GM had a pipeline packed with new product ready to come out in the mid 80s which had Chrysler and Ford quaking in their boots. Neither had the money to compete with GM.

    But it turns out that all of that new product turned out to be awful and sowed the seeds of GM’s steady demise starting about 1985 or so, that has continued pretty much unabated to this day. GM’s death has been a long, slow suicide.

  • avatar
    klossfam

    romanjetfighter :
    July 24th, 2009 at 6:06 pm

    klossfam: I think that has more to do with declining Toyota quality.

    Ever feel the interior grab handles of a Camry? Hollow plastic that wiggles if your grasp is firm. This is a 30k top of the line XLE. You can see the little seams of the plastic parts when they casted them, too. Everything’s misaligned, and even the seat fabric is uneven on the seat foam.

    Meanwhile, Hyundai Sonata’s interior is Lexus-lite, and while a bit ugly on the outside and cramped, has pleasant feeling plastics and good quality.

    Agreed romanjetfighter. Toyota is going with poorer quality materials AND fit and finish sucks. You see it in Honda too…We traded a 2004 Pilot EX for the 08 Highlander Ltd and the 04 Pilot was light years ahead of the HL (or the new ugly arse Pilot) for interior materials and fit/finish. I liked the Veracruz but needed at least 4500-5000 lb towing capacity…and wanted to stay unibody vs body on frame.

  • avatar
    gmemployee

    Look I’m going to admit Hyundai has come a long way. They are without a doubt a significant player now.

    However you all have short memories. Exactly who filled the fleet void after GM F and DCX came to the conclusion that customers were pissed that excessive fleet sales were irritating their customers because of diminished residuals??

    Hyundai! You all are smart people. Its not rocket science fer crying out loud

    OF COURSE THEY HAD A GREAT QUARTER!!!!!!!
    THE DUH FACTOR HERE IS OFF THE CHAIN.

  • avatar
    ra_pro

    This ain’t rocket science to Koreans. You build decent, reliable cars with good warranty and they will sell. But it takes time to build the market it can’t be done overnight, or in a Wall St. quarter. It takes a decade or more. The General can either take the time to learn this or they can close the shop. Actually, it’s too late. They can start turning off the lights.

  • avatar
    Deepsouth

    Our GM dealer is dualed with Hyundai. Thus far this month he has retailed more new Hyundai product than Chevrolet and Cadillac. The Genesis sedan is taking sales away from Cadillac CTS. To me this illustrates just how far Hyundai has moved up and how far GM has fallen.

  • avatar
    lw

    Deepsouth:

    If I put a brand new CTS in the driveway, nobody would care. If I put a new Genesis, I bet a few neighbors would stop buy for a look.

    Now if I put a 60’s Caddy in the driveway, I would get TONS of interest.

  • avatar
    gslippy

    Hyundai’s can blame their success on the recession and the credit crunch, just like GM does.

    And I really would like to have a Forte.

  • avatar
    paulie

    Jeff Puthuff

    Let me try to help…

    ““operating profit, or sales minus the cost of goods sold and administrative expenses, fell 0.8 percent to 657.3 billion won”

    How can falling operating profit be better?
    Ever.
    I am not talking about making a relatively big profit, as relative is a key word.
    My boss had no problem ever reminding me of what
    profit meant.
    Its what is left…period.

    Now don’t get me wrong as I like that Hyundai is spending because you can’t compete without it.
    BUT…I am not so sure they benefited so much from the marketing as being in the right place at the right time with the right (non Genesis)products.
    And still not convinced the Genesis is a big success.
    I think the numbers suck so far. we will never know truly how much was spent developing and marketing this rather expensive low end lux.
    And

  • avatar
    Jeff Puthuff

    Paulie, I don’t need your help.

    Wow! Margin fell a whole .8%, in a recession no less. (I’m being sarcastic, BTW.) Perhaps, when the economy recovers, that outlay in administrative expenses will pay dividends. Or not.

    I don’t really care, though, as I don’t own Hyundai stock. I’m just here because I like cars.

  • avatar
    SpaniardinTexas

    Hyundai, the new Toyota… some people say that Toyota has changed in to GM, lol… the great thing about Hyunday is the excellent quality price in the latest cars, specially the Elantra and the Sonata… but at the same time, I believe they are making a mistake with the Azera and even the Genesis… don’t get me wrong, they look like fine vehicles, but the question is the same that GM has known forever and Toyota learned in the 90’s… not may folks want to pay 30k plus for the same make of the car that some kids drive to school… maybe they will make another brand… who knows..

  • avatar
    Campisi

    Hyundai’s recent success is pretty simple: they offer Toyota customers the Toyota experience of five years ago, and for far less money. Combine this with an economic climate that has everyone running for everything that’s a cheap safe bet, and there you go.

  • avatar
    rmwill

    Funny how when Ford sells a growing number of Flexes (4000+)in this market the TTAC faithful call it dissapointing, yet when the much vaunted Genesis sells less that 2K its because of a “bad market”

    Hmmmmm

  • avatar
    don1967

    Frugality is in, but don’t dismiss Hyundai that quickly. The company is also fixing to blow Toyota and others out of the water on quality and product design as well.

    I’ll say it again: While Toyota becomes the new GM, Hyundai becomes the new Toyota. And it doesn’t take much imagination to see that the Chinese will soon become the new Hyundai.

  • avatar
    BD

    “At a tepid 1,800 sales last month the Genesis isn’t going to stir up any boardrooms.”

    – Maybe not, but the midsized import luxury market isn’t a big seller, esp. these days; and the Genesis sedan is selling at 3x the rate of the Lexus GS and the Infiniti M (you don’t think Lexus and Infiniti have noticed?).

    **************

    “Funny how when Ford sells a growing number of Flexes (4000+)in this market the TTAC faithful call it dissapointing, yet when the much vaunted Genesis sells less that 2K its because of a “bad market”

    – Ford projected 100k annual sales for the Flex, so annual sales in the 56k range isn’t that great (even taking the economic climate into consideration).

    Hyundai, otoh, projected to move 20k units of the Genesis sedan annually; and they are pretty much on target in meeting that projection.

    **************

    “However you all have short memories. Exactly who filled the fleet void after GM F and DCX came to the conclusion that customers were pissed that excessive fleet sales were irritating their customers because of diminished residuals??”

    Once the economic climate turns, Hyundai will likely ease off on fleet sales (esp. w/ the new products coming on line).

    But even when you factor out the increase in fleet sales this year, Hyundai’s drop in sales (compared to last year) is still only 11-12%.

    Also, the rental auto business has changed significantly over the past few years – rental companies no longer buy bare-bones models and instead, purchase models w/ more features for better resale.

    And despite the increase in fleet sales, Hyundai’s residuals have increase 12% over the past 3 yrs – that’s the highest jump in the industry.

  • avatar
    Orian

    As the previous owner of a Hyundai and a current owner of a Kia initial impressions/quality is excellent. It’s a couple years into ownership that it starts heading south.

    Both vehicles were in and out of the shop frequently. The Hyundai: alternator bracket broke, transmission had to be rebuilt, failed cat @ 70k miles that also cracked the exhaust manifold.

    The Kia? Power seat broke and had to be repaired, the ecu had to be replaced, it started blowing fuses to the fuel pump with no apparent reason why, cats (both) failed at 70k miles that has caused a major issue with the engine that they do not want to cover under that warranty, even after we spent $1200 the week prior for warranty, recall, and general maintenance on the damn thing. This is with the Hyundai 3.5l V6 in the thing.

    Overall the prescribed maintenance on most Hyundai/Kias is a bit above other vehicles. The old 2.7l V6 required valve work at 90k as required maintenance. All of their engines (unsure on the new V8) require a timing belt change at 60k (while not totally unusual it is always a costly procedure at the Hyundai/Kia dealerships).

    And I forget who works the auto auctions, but he always brings up the point that he rarely sees any Hyundai/Kia product at auction with more than 100k miles on it.

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