Sales of High-end Models Solid
The authors are analysts of Shinhan Investment Corp. They can be reached at yjjung86@shinhan.com and ik.jung@shinhan.com, respectively. -- Ed.
Domestic: Solid sales of high-end models despite unexpected negatives
Domestic auto sales (excluding imported cars) stood at 112,000 units (-5.6% YoY) in August, falling for the first time in six months, largely due to a lower number of working days (1.5 days less) and the resurgence of COVID-19 negatively affecting operations. Hyundai Motor saw domestic sales rise 3.2% YoY to 55,000 units in August. Mid-range models including Avante and Kona recorded lackluster sales, while high-end models like Santa Fe, Palisade, and Grandeur that have driven ASP higher performed relatively better. Kia Motors’ domestic sales dropped 11.3% YoY to 38,000 units, the lowest since February. The steep drop was caused by the fading effect of the new K5’s release and the high YoY base of K7 sales. ASP should continue to rise thanks to brisk sales of the all-new Carnival (4,736 units).
Overseas: On the recovery path as expected
Shipments of overseas subsidiaries reached 195,000 units (-13.5%YoY) at Hyundai and 92,000 units (-13.1% YoY) at Kia in August. Overseas wholesales (including exports) stood at 258,000 units (-17.1% YoY) and 178,000 units (-3.7% YoY), respectively. Hyundai’s overseas plant shipments were relatively stronger, with the extent of the decline narrowed to the 10% range for the first time since February. On a MoM basis, all overseas plants excluding the US unit reported a double-digit growth. Kia’s overseas plant shipments excluding India dropped 21.9% YoY, but exports from domestic units climbed due to the launch of the new K5 (DL3) and Stinger face-lift.
Retain OVERWEIGHT; top picks are Hyundai Motor, Hyundai Mobis, Mando
Sluggish domestic auto sales in August were mainly attributable to supply issues, rather than a slowdown in demand. We therefore expect domestic sales to normalize from September. Overseas demand is also recovering at a rapid pace. Auto sales in the US increased at a seasonally adjusted annual rate of 15.19mn units (-10.5% YoY, +4.6% MoM) in August. In India, Maruti Suzuki and Hyundai Motor posted solid sales growth of 21.7% and 19.9% YoY, respectively. A temporary decline in domestic sales caused by overseas variables should be offset by improvement in capacity utilization at overseas plants and rise in exports.