Hyundai Motor Co reported on Wednesday more than a 20 per cent drop in its first quarter profit as the anti-Korean sentiment in China sparked by the deployment of the US missile defence system battered the Korean carmakers’ sales in its biggest auto market.
The company said its January-March net profit was 1.3 trillion won ($1.2 billion), down 21 per cent from 1.7 trillion won a year earlier.
Its profit slide was smaller than what analysts expected. FactSet, a financial data provider, said the market consensus was 1.22 trillion won.
Sales rose five per cent to 23.4 trillion won ($20.8 billion). Operating profit fell seven per cent to 1.3 trillion won. The biggest drag in earnings was the US missile system that triggered China’s anger and hurt Korean businesses in the world’s most populous country.
Hyundai Motor, the maker of Tucson sports utility vehicles and Sonata sedans, said it sold 206,000 cars in China during the first three months, down 14 per cent from a year earlier.
In January and February, Hyundai appeared to have been on track for sales recovery in China. That changed when South Korea’s Defense Ministry signed an agreement with Lotte Group in late February to use its golf course in the southwest to deploy the missile defense system, known as THAAD. In March, Hyundai saw a sharp fall in its China car sales.
“Such sales fall is not due to the internal factor as you know. It is the result of the anti-Korean sentiment that flared up within China since late February and some rivals that launched marketing to exploit the anti-Korean sentiment,” said Koo Zayong, a vice president at Hyundai Motor.
South Korea and the US say THAAD is a deterrent against North Korean aggression, but China opposed it because it worries that its powerful radars could peer through its territory.