Milestone in Japan
Japanese automaker Toyota has achieved a significant milestone in its history during the second quarter of this year, surpassing 10 trillion yen in revenue for the first time and outpacing the sales of Hyundai Motor Group. However, Toyota’s market share has declined in critical markets such as the United States and Europe, making its second-half performance change noteworthy.
According to industry sources on Aug. 2, Toyota’s operating profit for the second quarter of this year has surged by a whopping 93.7 percent compared to the same period last year, reaching 1.12 trillion yen (US$7.80 billion). Toyota has become the first among Japanese enterprises to break the 1 trillion yen mark in quarterly operating profit.
In terms of sales revenue, Toyota has accomplished a remarkable 24 percent growth, recording 10.55 trillion yen when compared to the same quarter of the previous year. Concurrently, its net profit has shown a remarkable ascent of 78 percent, standing at 1.31 trillion yen. This surge represents historical peaks for both sales and net profit figures.
In the first quarter, Toyota had conceded its top position in sales to Hyundai Motor Group by a narrow margin of 158 billion won in operating profit. In the second quarter, however, Toyota regained its position as the global car sales leader with a gap of over 3 trillion won. The combined operating profit of Hyundai Motor and Kia in the second quarter of this year amounted to 7.64 trillion won, fostering anticipation within the industry that they could potentially surpass Toyota in the second quarter, building on their previous achievement in the first quarter.
Toyota’s unexpected second-quarter success can be attributed to factors such as an increase in sales due to the easing semiconductor shortage, favorable exchange rate effects from a weaker yen, and price hikes due to complete and partial model changes. Particularly, the sale of eco-friendly vehicles and high-value models emerged as potent driving forces, with hybrid and electric vehicles constituting 34.2 percent of the overall sales in the second quarter.
Nevertheless, Hyundai Motor Group’s strategy of electrification and upscale positioning has led to an increase in market share in key markets like the United States and Europe, potentially narrowing the gap with Toyota in the latter half of the year again.
As reported by U.S. automotive outlet Automotive News, Hyundai Motor Group’s market share in the U.S. market during the first half of this year rose by 0.3 percentage points compared to the corresponding period the previous year, reaching a total of 10.6 percent. During the same period, Toyota recorded a market share of 13.5 percent, surpassing Hyundai Motor Group, but marking a decline of 1.8 percentage points from the first half of the previous year.
In the European market, Hyundai Motor Group has already outperformed Toyota. Hyundai’s sales in the market were 575,432 units, outpacing Toyota by a margin of 27,777 units. Moreover, Toyota’s stronghold in Southeast Asian markets such as Vietnam, Thailand, and Indonesia, where it has traditionally held the lead, is being challenged by Hyundai’s expanding market share.
Electric vehicles emerge as Hyundai Motor Group’s trump card in the second-half performance battle. As it has already embarked on the electrification transition, Hyundai Motor Group holds an advantage in the electric vehicle sector. Its sales in the U.S. market for the first half of the year increased by 16.7 percent compared to the same period last year, reaching 820,180 units. This figure outpaces the overall U.S. market sales growth rate of 12.9 percent. Impressively, electric vehicle sales saw a notable surge, totaling 38,057 units, an 11.4 percent increase from the previous year, despite the challenges posed by the Inflation Reduction Act.
Affiliated with Hyundai, Kia is also planning to focus on expanding electric vehicle sales. With a strategic focus on the third quarter, Kia is poised to embark on the mass production of its large EV9 electric sport utility vehicle in both the U.S. and European markets. Subsequently, the company will initiate full-scale sales in each market beginning in the fourth quarter. In the United States, Kia is investing US$200 million (259.4 billion won) in its Georgia plant to promote local production of the EV9.
Moreover, the emphasis on high-value vehicle models is another promising strategy. During its Q2 earnings conference call held on July 26, Hyundai Motor announced that it would focus on expanding market share and defending profitability through an improved mix centered around high-value vehicle models, including the global release of the fifth-generation Santa Fe.