SEOUL -- Hyundai Motor Co. is expected to report a record quarterly profit, driven by strong domestic sales and exports of high-end cars like the Santa Fe SUV.
Quarterly profit is expected to be reported at the end of February or early March.
But the automaker faces a tough 2003, with General Motors Corp. leading a relentless price war in the key U.S. market and a strong Korean currency making Hyundai's products more expensive, analysts said.
"The situation is not easy for Hyundai right now, since the Big Three auto makers have all embarked on an aggressive marketing drive," said Kim Hagju, an auto analyst at Samsung Securities.
Hyundai, 10-percent owned by U.S.-German automaker DaimlerChrysler AG, is likely to post a record net profit of 313 billion won ($269 million) in the fourth quarter ended December 31, up almost 25 percent from a year ago, according to a survey by research firm Multex. The earnings report is scheduled for Wednesday.
Sales likely increased 20 percent to 6.65 trillion won.
Once satirised as a maker of tinny vehicles, Hyundai has invested heavily in upgrading and improving the reliability of its cars. The popular EF Sonata mid-sized sedan and Santa Fe sports utility vehicle (SUV) are the results.
Hyundai is following Japanese rivals in making inroads into the key U.S. market for SUVs and luxury cars.
Honda Motor Co., Japan's No. 2 car maker, last week posted record quarterly profit, partly on booming sales of its Pilot SUV. Toyota Motor's earnings report, scheduled for Wednesday as well, is likely to show a similar trend.
The South Korean auto maker ranked seventh in U.S. automobile sales at the end of last year, accounting for a 2.2 percent share of the world's largest car market, just behind Nissan Motor Co., but ahead of Mitsubishi Motors Corp. and Mazda Motor Corp.
Hyundai shares, which have lagged the broader market by seven percent in the last six months, gained almost five percent to 25,850 won early on Monday on hopes for strong results.
The stock also got a shot in the arm after a top Hyundai official told a conference on Friday that the auto maker's plans for expansion in the United States could include adding pickups, full-sized SUVs and luxury cars to its lineup.
Hyundai said last month its 2002 car sales would reach a record 1.7 million, fuelled largely by soaring domestic sales as South Koreans lined up to buy cars after the government cut taxes on automobile purchases to spur consumption. The tax break ended last September.
Hyundai Motor has said it expects sales this year to rise more than seven percent to a record 28.2 trillion won, betting on stronger exports of high-end cars.
But Detroit's Big Three auto makers hold more financial ammunition in a price war, undermining Hyundai's cost advantage and competitive warranties, analysts said.
GM said earlier this year that its fourth quarter net earnings quadrupled due to strong U.S. sales of its highly profitable SUVs and pickup trucks, driven by heavy consumer incentives.
"If sales don't reach expected levels, then Hyundai's first half earnings may come under burden due to increased marketing costs," said Kim.
The automaker and its affiliate Kia Motors Corp. announced plans earlier this year to boost research and development spending by almost 50 percent in 2003 to catch up in quality with the likes of Toyota Motor Corp.
Hyundai also said it planned to cut interest rates on financing deals in the U.S. market to around 1.5-2.5 percent from the current 3.5-4.0 percent interest per month, depending on the model.