Hyundai Motor reports 7% drop in Q3 operating profit, misses expectations

Hyundai Motor Co said Wednesday its third-quarter operating profit dropped 7 percent, mainly due to warranty costs stemming from its Santa Fe SUVs and a global slide in car demand. The automaker made an operating profit of 3.6 trillion won in July to September compared with 3.8 trillion won in the same period a year earlier.

The result missed analysts' expectations, with LSEG SmartEstimate consensus forecast of 3.9 trillion won for the first two quarters combined. Hyundai said in a statement that the ongoing uncertainty in the business environment was the reason for the uncertainty, which skid has led to a slowdown in growth in the main markets.

The profit decline reflected a provision of 320 billion won tied to warranty extensions for Santa Fe SUV engines sold in the United States included in the earnings report. Hyundai's share price fell further after the announcement; it was down 3.7 percent on Thursday.

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Similar echoes of a challenging landscape for automakers have been sounded by Europe's giant manufacturers, including Volkswagen, Mercedes-Benz and BMW, who have all warned of an alarming auto demand outlook and steep increases in operational costs, causing a drumbeat of market value losses in the sector.

In sales performance terms, Hyundai's global retail sales decreased by 5 percent in its third quarter compared to last year. Reduced sales in Europe was the main reason for this decline but the US and South Korea improved.

Hyundai however, is struggling with these challenges, with no certain future amidst changes in buyer demand and rising costs that continues to put pressure on its financial performance in upcoming quarters.