Following the news that South Korean manufacturer Hyundai Motor’s operating profit halves in Q2 2020.

Bakar Sadik Agwan, Senior Consulting Analyst at GlobalData, a leading research and consulting company, offers his view:

“Hyundai Motors reported a decline of 52% year-on-year in Q2 2020 operating profit due to low demand for new vehicles in the overseas market. The company’s operating profit fell to US$492m (590bn Won) and Q2 sales declined by 19% to US$ 18.3bn (21.86 Trillion Won).

“As per the company’s data, Hyundai reported a year-on-year decline of 22.7% in its global vehicle sales in June 2020 and the sales volume stood at 291,854 units. The decline in sales is majorly accredited to slowdown in the economic activities due to the impact of COVID-19 pandemic globally and the resultant decline in sales in key overseas market for Hyundai which includes Europe, US, India and China.

“Hyundai Motor India reported 49% year-on-year decline in June 2020 sales. Beijing Hyundai Motor Co., Ltd. reported 20% year-on-year decline in China domestic sales in June 2020. Hyundai US and Europe retail sales declined by 22% and 35% year-on-year respectively in June 2020.

“The vehicle exports from South Korea are also a cause of concern for Hyundai.  The exports were 30.4% low year-on-year in June 2020 as per the company data. Decline in exports was primarily accredited to the demand slump in the US, Canada and the Middle East & Africa region, which are key export markets for the company.

“While overseas sales declined, domestic sales for Hyundai remained strong. After declining by 21% and 26% in January and February, the new vehicle sales improved for the manufacturer in South Korea. The domestic sales were up 37.2% in June 2020 compared to previous year. “It is evident that the impact of COVID-19 on the auto sector may not fade away soon and the demand for new vehicles is likely to remain lower compared to pre-COVID levels in most markets. A combination of risk management efforts, new vehicle launches and digitization of vehicle sales would help in minimizing the impact of COVID-19 on Hyundai.”