Palisade, Telluride lead Hyundai, Kia rebound

Hyundai Motor's Palisade / Courtesy of Hyundai Motor

By Nam Hyun-woo

The brisk sales of Hyundai Motor's Palisade and Kia Motors' Telluride large SUVs is paving the way for the two auto brands to bounce back from their earnings slump.

According to reports from the two brands, Hyundai Motor saw an 824.9 billion won ($710.5 million) operating profit in the first quarter, up 21.1 percent from a year earlier. Sales also grew 6.9 percent to 23.99 trillion won.

Its affiliate Kia Motors posted an operating profit of 594.1 billion won, up a whopping 94.4 percent year-on-year, though sales backpedaled slightly by 0.9 percent to 12.44 trillion won.

Hyundai Motor's improvement is largely attributable to the domestic sales of the Palisade.

More than 18,000 Palisades, which made its Korean debut in December, were sold in the first quarter. Initially, Hyundai Motor sought to sell 25,000 domestically this year, but said in a conference call that it will boost production and add an additional 15,000 vehicles.

Following an agreement between its management and union, Hyundai Motor increased the monthly volume of the Palisade by 40 percent from 6,240 to 8,640 this month. The increase will help expedite the car's global sales, with the company planning to roll out the Palisade in the U.S. in the third quarter.

“Hyundai Motor's recovery was largely attributable to brisk sales of the new SUV and improvements in its financial status,” Hana Financial Investment analyst Song Sun-jae said. “Given the company's plan to release the new Sonata and Genesis brand's the G80 and the GV80 globally, the firm will likely show a sharper recovery in the second half.”

Kia Motors' Telluride / Courtesy of Kia Motors

Analysts said Kia Motors' surge in operating profit came when the firm was able to redirect 430 billion won set aside for costs after its union and management agreed on wage terms, and the Telluride's popularity in the U.S.

Launched in the U.S. in February, the Telluride's aggregated sales reached 10,961 last month, after selling 4,630 in February and 6,331 in March.

Should it continue at its current pace, Kia Motors is expected to meet its annual goal of selling 64,000 Tellurides easily, analysts said.

“Due to competition and lack of new cars, Kia Motors' domestic sales will slow in the second quarter, but new models including the new K5, the SP2, the K7 and the Mohave are ready to roll out in the second half, which will lead to improvements after the summer,” Song said. “The favorable response to the Telluride is also playing a role in that.”