Revenues and profitability of South Korea’s largest automaker Hyundai Motor Co. and its sister Kia Motors Corp. have slipped to the worst performing level among global automakers due to lackluster sales in major markets including China and recall costs at home and in the U.S.

According to sources on Sunday, Hyundai Motor posted an operating margin of 5.4 percent in the first six months of this year, ranking ninth and tied with Honda out of 12 peer automakers. It was down 1.2 percentage points from 6.6 percent a year earlier when the company ranked fourth. Kia Motors reported 3.0 percent in operating margin in the same period, down 2.2 percentage points from 5.2 percent of a year ago. The car maker fell to the lowest 12th from eighth last year.

The crushing result was caused by increased inventory and mounting incentives paid to promote sales amid weak demand in America, hefty recall costs associated with Hyundai Motor’s Theta II engine and poor sales in China following Beijing’s retaliatory actions in protest to the deployment of U.S. missile shield in Korea. In contrast, other global automakers revved up sales in the first half of this year. German automaker BMW took the top spot with an operating margin of 11.2 percent, similar to 11.3 percent a year ago.

As of 11:30 a.m. Monday, shares of Kia Motors were 1.7 percent up at 35,800 won, while shares of Hyundai Motor were 1.76 percent up at 144,500 won from the previous session.

By Woo Je-yoon

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