Hyundai Mobis, the car component making arm of Hyundai Motor, is expected to return to profitability this year, according to South Korean analysts.
This is thanks to high demand for electric cars __ Hyundai Motor is preparing to manufacture Ioniq 6, its latest electric car model soon.
Hyundai Motor has suspended production at its automobile factory at Asan. Hyundai Mobis will also suspend production of its plant at Asan nearby. The suspension will last until August 9.
Hyundai Motor said the suspension was being done to prepare for the production of a new car model.
South Korean analysts said the automobile giant is adjusting its factory in preparation to manufacture Ioniq 6. The Asan plant currently mostly manufacture Sonata brand of combustible engine cars.
The conversion to manufacture Ioniq 6 will benefit Hyundai Mobis greatly. The car component company supplies the motors, inverters and on-board chargers used in Ioniq 5 and Hyundai’s EV6.
Hyundai Mobis will likely be the exclusive supplier of the motor components for the Ioniq 6 as well.
Kimwoom Securities Analyst Kim Min-sun said Hyundai and Kia has relied on its inventory to minimize effect on sales from the production halts caused by the global chip shortage.
The car brands will likely increase their factory operation rate to normalize their inventory levels in the second half of the year. Components used in models designed through E-GMP, Hyundai’s electric car platforms, will see 15% increase in profitability thanks to the drop in cost of raw materials, Kim added. Hyundai Mobis will likely break even in the least within the year, the analyst said.
Hyundai Mobis’ electric component business unit doesn’t reveal their earnings but is thought to be in the red by analysts.
The business unit is expected to record 6.2 trillion won in sales this year, an increase of 48% from 2020, according to analysts.
Ebest Investment & Securities analyst Yoo Ji-woong said shortage for E-GMP components will ease quarter by quarter. Hyundai Motor will start manufacturing electric cars in China massively next year while expanding their presence in the US, which will give Hyundai Mobis growth momentum, Yoo added.