“By adding the provisions to the operating profit, you would find that Hyundai is doing pretty well,” said Koh Tae-bong, head of research at HI Investment & Securities in Seoul.
Hyundai cut its 2022 sales target to 4.01 million vehicles from 4.32 million, and also trimmed its planned investment for the year to 8.9 trillion won from 9.2 trillion won.
Hyundai and its affiliate Kia said last week they would book a combined 2.9 trillion won as provisions in third-quarter earnings due to costs related to Theta engines.
More owners than expected demanded replacement engines during the pandemic rather than buying new cars, pushing up warranty costs, the automakers said.
The issue could hurt the companies’ share prices in the near term, Nomura analyst Angela Hong wrote in an Oct. 20 note.
EV sales
Hyundai said its EV sales rose more than 27 percent from a year earlier to about 52,000 units, accounting for 5.1 percent of overall sales volume. Despite the provisions and challenges such as inflation and geopolitical uncertainty, Hyundai expects record-high results this year, it said.
The automaker raised its EV sales target for 2023 by 40 percent to about 300,000 units, with the Ioniq 6 accounting for about 20 percent of those sales next year.
Hyundai also said it is considering investing a joint venture to make batteries in the U.S.
