Production disruptions at Hyundai Motor and Kia have placed mounting pressure on Hyundai Mobis’ third-quarter financial performance. The suspension of operations at major assembly plants has led to a decline in module supply volumes, while the company also contends with rising component costs and foreign exchange volatility. Consequently, brokerage firms have begun lowering their earnings forecasts and target prices for the stock. In contrast, the company’s lucrative after-sales (A/S) parts division is expected to maintain relatively stable momentum.
On the 13th, Kiwoom Securities cut its target price for Hyundai Mobis (012330) by 14.7%, lowering it from 750,000 won to 640,000 won. Hanwha Investment & Securities also reduced its target price from 810,000 won to 800,000 won on the same day. Previously, Hana Securities and Daishin Securities had both issued a target of 580,000 won, while Shinhan Investment Corp. adjusted its target down to 710,000 won.
Consensus estimates for third-quarter operating profit hover around 900 billion won. Kiwoom Securities projects sales of 15.9 trillion won and an operating profit of 902.8 billion won. Hanwha Investment & Securities forecasts sales of 15.754 trillion won with an operating profit of 920.6 billion won. Estimates from Hana Securities and Daishin Securities stand at 896.4 billion won and 890.3 billion won, respectively.
Aftermath of Hyundai-Kia Strikes: Module Sales Dip Below 7 Trillion Won
Production bottlenecks at domestic Hyundai Motor and Kia plants have directly impacted Hyundai Mobis' module business. With the supply of chassis and cockpit modules—essential for vehicle assembly—declining, third-quarter sales are expected to contract.
Shin Yoon-cheol, an analyst at Kiwoom Securities, stated, "Due to the impact of strikes at Hyundai Motor and Kia, which halted domestic plant operations, third-quarter module assembly sales are expected to fall below 7 trillion won for the first time this year."
Despite the reduction in vehicle production volumes, the module assembly business is still expected to remain slightly profitable. Analysts suggest that the company’s efforts to diversify its client base beyond the Hyundai Motor Group have helped mitigate some of the impact of the sales decline.
Beyond declining sales, cost pressures have intensified. Hanwha Investment & Securities attributed the third-quarter margin squeeze to rising prices for key components, such as semiconductors and printed circuit boards (PCBs), alongside a stronger Korean won. With production volumes down and procurement costs up, improving profitability in the manufacturing division remains a significant challenge.
Even if production at Hyundai Motor and Kia normalizes and module supplies recover, the profitability pressure stemming from rising component costs is expected to persist for the foreseeable future.
A/S Operating Margin at 26%: Divesting Lamp Business, Pivoting to Robotics
Despite production setbacks, the A/S business is expected to sustain high profitability. Because this segment relies on maintenance and repair demand from vehicles already on the road, it is relatively insulated from fluctuations in new vehicle production.
Hana Securities estimates Hyundai Mobis’ third-quarter A/S sales at approximately 3.4 trillion won, with an operating margin of 26.0%. While the module assembly business bears the brunt of production disruptions, the A/S division serves as a critical pillar supporting the company’s overall operating profit.
However, the high profitability of the A/S unit has limits in offsetting the growth slowdown in the manufacturing sector. This reality is driving Hyundai Mobis to restructure its legacy automotive parts business while aggressively expanding investment into new fields such as automotive electronics and robotics.
On the 30th of last month, Hyundai Mobis signed a definitive agreement to sell its lamp business to the French automotive supplier OP Mobility for approximately 600 billion won. The company plans to complete the sale next April, following a physical split of the business unit.
The divestiture of the lamp business aligns with a broader strategy to reshape the company around high-margin, high-growth core components. While focusing on electrification and automotive electronics, Hyundai Mobis is also cultivating robotics components as a new business pillar.
A key focus area is the development of joint actuators for Boston Dynamics' robots. Actuators—components that control robotic joint movement using motors and decelerators—allow Hyundai Mobis to leverage the expertise in drive and control technologies accumulated in its automotive parts business.
Market observers suggest that sample supplies of these actuators could materialize within this year. While further contracts are required to achieve full-scale mass production and significant revenue growth, Hyundai Mobis is clearly broadening its horizons, moving away from a heavy reliance on conventional vehicle production through strategic divestments and innovative R&D.
