Hyundai expecting vehicle production to rebound in 2022 as chip supply improves

Hyundai Motor forecasted a comeback in car production in the first half of this year, as a global chip shortage is likely to alleviate gradually beginning in the second quarter. "The normalisation of car chip supply and demand is predicted in the third quarter, when semiconductor firms' capacity is likely to grow," Hyundai Executive Vice President Seo Gang Hyun stated during the company's conference call. The scarcity would persist in the first quarter owing to the spread of the Omicron variant, according to Seo, who added that the extended COVID-19 pandemic in Southeast Asia, as well as the consequent chip procurement issues, drove Hyundai's sales to fewer than the anticipated 4 million vehicles in 2021.

Southeast Asia is critical to the supply of fundamental semiconductors that power the world's automobiles, cellphones, and household appliances, with Malaysia's chip assembly sector accounting for more than a tenth of a $200 billion worldwide commerce. Since last year, COVID-related lockdowns in the region have impacted various companies. Hyundai anticipates a 20% increase in sales in its largest market, North America, in 2022.

Hyundai and its subsidiary Kia Corp, which are both among the world's top ten automakers in terms of sales, have anticipated a 12.1 percent increase in their combined worldwide sales for 2022, after falling about 4 percent short of a target of 6.92 million cars last year owing to chip shortages. Hyundai reported an almost 50% decline in profit for the quarter ended December, falling far short of analysts' expectations, owing mostly to the payment of corporate taxes.

It posted a net profit of 547 billion won ($456 million), compared to 1.1 trillion won the previous year. Analysts predict that rising raw material prices, component shortages, and logistical delays caused by the epidemic would drive up expenses further in the current quarter. Both Japanese manufacturers, Toyota Motor Corp and Honda Motor Co Ltd have announced plans to reduce production this month owing to an increase in COVID instances and part supply concerns. Analysts anticipate Hyundai will hike car pricing to cushion the effect of supply chain and distribution issues, delaying deliveries and manufacturing.

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• Hyundai
• chip supply
• Toyota
• Honda
• chip shortage