S&P Global Ratings upgraded credit rating of Hyundai Motor Co. (HMC) and Kia Corp. to ‘A-’ from ‘BBB+,’ reflecting their improved market position and profitability. This upgrade is driven by the companies’ strong performance, especially in the U.S. market, where their focus on sports utility vehicles (SUVs) and electric vehicles (EVs) has significantly boosted their market share.
Hyundai-Kia’s strategic shift towards profitability has led to better product and geographic mixes, positioning them as the world’s third-largest auto manufacturer. Despite challenges in the global automotive market, including pricing pressures and slowing growth in electric vehicle sales, the company has maintained robust EBITDA margins, expected to stay between 12% and 13% in 2024-2025.
The stable outlook suggests Hyundai and Kia will continue to sustain their profitability and market positions, supported by their balanced portfolio of hybrids and EVs. However, potential risks include tougher market conditions, pricing pressures, and currency fluctuations, which could impact their performance.
The companies’ strong cash reserves, amounting to KRW 25 trillion (approximately $18.6 billion) in 2023, provide a solid buffer against market volatility, ensuring their ability to navigate future challenges.
