Hyundai and Kia to cut costs amid dropping profits

Article by Christian Andrei, on June 11, 2015

After operating profit and sales declined in the first quarter, Hyundai Motor Co. and Kia Motors Corp. have decided to cut costs, according to a joint email from the two companies. No details were given on where the cuts will be made. No estimates were cited. During the quarter that ended March 31, the operating profit of both Hyundai and Kia fell for the fourth straight quarter.

The automakers said that they haven’t been able to compete with companies like Toyota Motor after their sales were affected by the unfavourable currency-exchange rates. KB Investment & Securities Co. analyst Shin Chung Kwan predicts that the first item to be cut would be related to marketing, advertisement, and sales.

He also thinks that with the present situation, the automakers will have a say during negotiations for other incurred costs like wages and prices of auto parts. A senior executive source told the JoongAng Ilbo newspaper that Hyundai Motor Group aims to cut 30% of costs. Japanese automakers have the advantage in overseas markets amid the strengthening won and a weakening yen.

Hyundai’s sales, both domestic and overseas, fell for a second straight month in May. It also wasn’t able to get on the global SUV boom, brought on partly by the drop in gasoline prices.

None of Hyundai’s SUVs got in the top 10 top-selling models in China (its biggest market) during the first quarter. Last April at the Shanghai auto show, Hyundai displayed the revamped Tucson SUV.

Hyundai is planning to sell 90,000 units of the new Tucson in U.S. in 2016. Sometime in the second half of 2015, Hyundai’s new Creta SUV will be launched in India.

Topics: hyundai, kia, profit

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

More positive news has been pouring in before the year ends. For those who have been waiting to hear the latest word on Toyota 86, we have some great news....
by - December 10, 2016
Hyundai is making the green vehicle race more competitive by offering three powertrain types -- pure electric (EV), hybrid (EV plus combustion engine) and plug-in hybrid (PHEV) – in one...
by - December 9, 2016
Although specs for the new Renault Megane had already surfaced several weeks ago, we didn’t know that the company has cooked up something new. Aside from the 200hp gasoline, Renault‘s...
by - December 9, 2016
For the first time in fifty-eight years, Infiniti registers its first US-Spec Q60 Coupe in Cuba. American products have not been allowed entry into Cuba for six decades. But it...
by - December 9, 2016
Chevrolet has already given out the pricing for some of its 2018 Equinox models. Not only will the new Equinox be available in both the US and Canada, it is...
by - December 9, 2016
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries