SEOUL, South Korea (AP) - Hyundai Motor Co. reported its lowest annual profit in five years after a failure to fully anticipate strong demand for sports utility vehicles in China led to a sales drop in the world's largest auto market.
SEOUL, South Korea (AP) — Hyundai Motor Co. reported its lowest annual profit in five years after a failure to fully anticipate strong demand for sports utility vehicles in China led to a sales drop in the world's largest auto market.
The South Korean company said Tuesday its net profit for 2015 was 6.51 trillion won ($5.4 billion), down 15 percent from 7.6 trillion won in 2014.
For the final quarter of 2015, its net profit was 1.53 trillion won ($1.27 billion), down 8 percent compared with 1.66 trillion won a year earlier. Profit at Hyundai, South Korea's largest automaker, has dropped for eight quarters in a row.
Hyundai's sales in China dropped about 30 percent in June and July over a year earlier on lower demand for its passenger vehicles and the absence of a new sports utility vehicle model. SUVs have become the fastest growing sales category for new passenger vehicles in China.
Passenger cars accounted for nearly three quarters of Hyundai's annual vehicle sales last year while SUVs accounted for 21 percent. Its sales also took a hit as Chinese brands clawed back market share from foreign rivals.
Its monthly sales in China turned positive starting in October after the company released the revamped Tucson sports utility vehicle during the second half of the year. Overall, the company sold 1.06 million vehicles in China in 2015, a 5 percent decrease from the previous year.
Explaining the fall in fourth quarter profit, Hyundai's chief financial officer Lee Won-hee said the company had to increase incentives for car buyers in the U.S. market to sell its Avante model.
A fall in emerging markets currencies pressured sales in Latin American countries and dented the profitability of its overseas factories, he said.
For the fourth quarter of 2015, sales gained 5 percent to 24.76 trillion won while operating profit sank 20 percent to 1.52 trillion won.
The automaker expects to sell 5.01 million vehicles in 2016, an increase of 1 percent from 2015.