Hyundai Motor reported an 11 percent increase in first-quarter earnings on strong sales in Europe, China and India. Net profit rose to 463 billion won (US$400 million) for the January-March period, up from 418 billion won a year earlier, the company said in a statement.

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But the results came in slightly under expectations; analysts surveyed by Dow Jones Newswires forecast earnings of 470.2 billion won.


Hyundai’s export sales surged by 22.3 percent from a year ago, backed by strong overseas sales of the Sonata sedan and sport utility vehicle Santa Fe. Analysts say that Korean carmakers have increasingly relied on overseas sales for earnings after a credit spree at home left many consumers months behind on their debt payments, causing the domestic market to slump in recent months.


However, Hyundai Motor’s operating margin fell in the period (27 per cent down on last year to 461 billion won) as ageing models were discounted in the face of fresher product from Japanese rivals in Hyundai’s major export markets – especially the US.


It has been reported that heavy inventories have forced Hyundai in the US to increase average discounts per vehicle to $1,900 this year from $1,560 in the second half of 2003 – Toyota is at around $900 per vehicle.

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 “We could not report good results this quarter because of weak demand on the local market. But we are sure that a new product line-up and current marketing activities will help improve earnings in the next quarter,” said Park Hwang-ho, president of Hyundai Motor, during an investor relations session in Seoul yesterday.