Hyundai Motor faces projected third-quarter earnings decline

Hyundai Motor Company is facing a projected decline in third-quarter performance due to a combination of production disruptions, rising costs, and weakening exchange rate effects. Analysts expect a decrease in both revenue and operating profit, with some forecasts suggesting that Hyundai's operating profit may be overtaken by its affiliate, Kia, for the first time in several years.

Key factors contributing to the downturn include labor strikes in July and August that resulted in a production gap of approximately 55,000 units, as well as increased manufacturing costs from rising raw material prices. Additionally, the decline in the average KRW/USD exchange rate compared to the previous quarter is expected to exert downward pressure on earnings.

While Hyundai faces challenges, Kia is projected to see improved performance driven by strong global sales. In the broader automotive sector, analysts suggest a selective investment approach, highlighting Hyundai Mobis and Hankook Tire & Technology as relatively stable options due to their ability to maintain profitability through after-sales services and global price adjustments, respectively.