Electrification And Localization Will Expand Global Reach

Key Takeaways

• Strong momentum in eco-friendly vehicles and premium branding advances margin recovery and positions the company well amid global market shifts.
  
• Strategic regional expansion, production localization, and resilient supply chains drive sales growth and safeguard profitability against global uncertainties.
  
• Escalating tariffs, increased incentives, reliance on hybrids over EVs, intensified global competition, and supply chain pressures are undermining Hyundai's profitability and long-term growth prospects.

Catalysts

Manufactures and distributes motor vehicles and parts worldwide.

• Robust growth in eco-friendly vehicle (EV/HEV) sales across key markets-including a 36.4% global increase and a 33.9% rise in EV sales-demonstrates the company's successful alignment with global shifts toward electrification and environmental regulations, positioning Hyundai to drive future revenue expansion.
  
• Continued investment and rollout of competitive new EV models (e.g., Ioniq 9, Inster) and hybrid SUVs, along with platform enhancements (E-GMP), are expected to support margin recovery and revenue growth as electrified and high-value vehicle segments expand.
  
• Strategic expansion in emerging and established regions, supported by tailored financing products through Hyundai Capital, is unlocking demand among a rising middle class and boosting vehicle sales volume, which underpins top-line growth.
  
• Ongoing localization of production, parts sourcing, and supply chain resilience initiatives are set to mitigate tariff/geopolitical risks, reduce cost of goods sold, and protect net margins-even as global trade policy remains uncertain.
  
• The strengthening of premium/luxury branding via Genesis and growing sales in the U.S. and Europe (Genesis now 5.5% of global sales) are expected to drive higher average selling prices and earnings through expanded margin in the premium segment.

Hyundai Motor Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Hyundai Motor's revenue will grow by 3.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 6.0% today to 6.2% in 3 years time.
• Analysts expect earnings to reach ₩12208.0 billion (and earnings per share of ₩47850.02) by about July 2028, up from ₩10692.8 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting ₩15650.0 billion in earnings, and the most bearish expecting ₩8601.0 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.1x on those 2028 earnings, up from 4.7x today. This future PE is greater than the current PE for the GB Auto industry at 4.5x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.78%, as per the Simply Wall St company report.

Hyundai Motor Future Earnings Per Share Growth

Risks

• Persistent and potentially escalating U.S. tariffs on Hyundai vehicles (and components) are already materially impacting operating profit and are likely to weigh even more heavily on profitability in coming quarters, particularly if the tariff rate remains at 25%; this poses a risk to both net margins and earnings.
  
• Rising incentive spending in key markets, utilized to maintain or grow market share amid tariff headwinds and competitive pressures, is negatively impacting profitability, with incentives up ₩535.6 billion year-over-year and contributing to a substantial decline in operating income.
  
• The transition to electrified vehicles is underway, but continued reliance on internal combustion engine (ICE) and hybrid sales for growth, instead of pure EVs, exposes Hyundai to long-term risks if market and regulatory momentum shift more rapidly toward full electric, potentially eroding long-term revenue and market share.
  
• Intensifying global competition-especially from established and new EV players, including Japanese peers adjusting pricing and exporting strategies-will likely pressure Hyundai on both market share and pricing power, which could compress revenues and net margins.
  
• Ongoing supply chain risks, rising raw material and component costs, and the need for increased localized sourcing and CapEx to navigate geopolitical and regulatory uncertainties may further inflate Hyundai's cost base, undermining operating profit and straining future earnings growth.

Valuation

• The analysts have a consensus price target of ₩282895.086 for Hyundai Motor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₩380000.0, and the most bearish reporting a price target of just ₩200957.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₩197293.3 billion, earnings will come to ₩12208.0 billion, and it would be trading on a PE ratio of 9.1x, assuming you use a discount rate of 12.8%.
  
• Given the current share price of ₩223000.0, the analyst price target of ₩282895.09 is 21.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.