Hyundai earnings expectations high on small car sales

Hyundai growth

Photo Credit: Tuning News

Hyundai is known for its compact cars meant for people on a budget. However, with oil prices sitting at $126 per barrel, people are opening up to the brand that focuses on smaller family cars and light sports cars. Net profit is expected to rise 3.4% while the total sales numbers should come in 12% higher.  Greater metal and energy costs are likely the difference between growth rates in profits and total sales.

Domestic growth weak

Hyundai’s growth has little to do with sales in South Korea, where its domestic auto sales fell by .6% year over year. Overseas sales accounted for 58% of sales last year, mostly from emerging markets. The emerging markets are buying Hyundai’s inexpensive family cars and high mileage vehicles.

Hyundai’s affiliate, Kia Motors, did even better, with profit increasing 26% year over year. These kind of results are the product of market absorption from smaller companies producing smaller cars. It's safe to say that the market share of Ford and GM is going to foreign auto makers who design smaller cars.

Hyundai beats other Asian automakers

Hyundai puts new hope in the global auto market. As US producers are failing quickly, even Japanese automaker Toyota expects new car sales to fall. However, Hyundai is producing great numbers on quality, inexpensive cars with high gas mileage. Hyundai’s smallest and most fuel efficient car rivals the Honda Civic and Toyota Corolla, but boasts a sticker price of just $10,775. Honda Civics and Toyota Corolla’s sticker at $15,000 and $15,250 respectively.

New prices coming soon

Hyundai will increase its prices on cars by 2% to offset higher steel prices. Even with this added expense, Hyundai’s small cars will beat the sticker price of most others on the lot. A two percent increase in their least expensive automobile is only a difference of about $220, still not enough to eliminate its shot in the budget automotive industry.

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