South Korean automakers Hyundai and Kia have been making waves in the U.S. auto market, especially in the hybrid and electric vehicle (EV) segments. Their stock prices have seen significant growth, with Hyundai Motor up 85% since late 2022 and Kia doubling. This success is primarily attributed to their strategic products and favorable geopolitical factors.
Hyundai and Kia have gradually increased their market share in the U.S., now holding over 10% according to Goldman Sachs. Their combined revenue in North America has doubled over the past five years, with the U.S. being their most lucrative market. This success is partly due to their popular SUV models like the Tucson and Santa Fe.
The companies have also made significant advances in green technology. Nearly 8% of Hyundai’s cars sold in the U.S. last year were EVs, and this rate is even higher in Europe, at 16%. They also offer a balanced product portfolio, with about 10% of Hyundai’s cars sold in the U.S. being conventional hybrids.
This is particularly important as hybrid sales are expected to grow faster than pure EV sales in the coming years. Nomura predicts that global hybrid sales will increase by an average of 26% between 2023 and 2026, outpacing the 19% growth of pure EVs.
Geopolitics also play a role in their success. Affordable EVs from China face barriers in the U.S., creating an advantage for South Korean automakers. Hyundai’s upcoming $7.6 billion manufacturing plant in Georgia will further boost their competitiveness.
India is another key market for Hyundai and Kia. Hyundai plans to divest a minority stake in its Indian unit, potentially raising billions of dollars. The companies have shifted their production capacity from China to India, especially as relations between China and South Korea have weakened.
Despite potential competition from Chinese EV manufacturers, Hyundai and Kia continue to trade at around five times their projected earnings, lower than most of their rivals. This makes them an attractive investment opportunity for those looking to capitalize on the growing EV and hybrid market.
