Hyundai Motor said Wednesday its quarterly profit was halved to its lowest level since 2010 as its auto sales in China and the U.S. plunged as the South Korean automaker paid dearly for lagging in its SUV lineup.
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Net income for the April-June period was 816.9 billion won ($728.8 million), down 51 percent from 1.7 trillion won ($1.5 billion) a year earlier, Hyundai Motor said.
The result was worse than expected. Analysts had predicted a net profit of 1.4 trillion won ($1.2 billion), according to FactSet, a financial data provider. It was also the smallest profit for Hyundai Motor since it began reporting quarterly results under new standards in 2010.
Operating profit sank 24 percent to 1.3 trillion won ($1.2 billion) during the period, while sales fell 2 percent to 24.3 trillion won ($20.9 billion).
Hyundai Motor's eroding profit over the past three years has been attributed to its failure to respond to a shift in consumer preference toward sports utility vehicles. Many consumers have ditched passenger sedans, which were Hyundai's forte, to snap up SUVs, where it lacks a varied lineup.
Hyundai offered bigger sales incentives to counter weakening demand for passenger sedans in the U.S. market earlier this year.
In China, the automaker suffered from political tensions between Beijing and Seoul over a U.S. missile defense system.
The maker of Genesis saw China sales sink 64 percent in April-June from a year earlier as Chinese consumers shunned Korean cars due to Seoul's decision to deploy a U.S. missile defense system. China is opposed to deploying the anti-missile system in South Korea because it worries that its powerful radars would peer into its territory. During the first half of this year, Hyundai's sales in China dropped 42 percent.
The company is expanding its SUV lineup and counting on its newly launched Kona, its first subcompact SUV, which will be released in Europe and the U.S. in coming months.