At a seminar at the Korea Automotive Hall in Seoul on January 16, Yang Jin-su, director of mobility industry research at Hyundai Motor Group’s Management Research Institute, outlined the challenges facing legacy automakers. He noted that companies must balance defending short-term profitability against funding long-term investments in next-generation mobility, even as global market growth remains subdued and development costs rise.
Last year, major manufacturers saw significant operating profit declines amid U.S. tariff increases and intensified competition from Chinese brands. Toyota now estimates tariff-related profit losses of about 1.4 trillion yen through March—up from an earlier forecast of 1.2 trillion yen—while Volkswagen has lowered its operating margin outlook by 1.5 percentage points to a 4–5% range.
Chinese automakers continue to expand both exports and local production, extending their presence from Western Europe to markets in Thailand, Indonesia, Malaysia, Brazil, and now Turkey. Yang warned that this price-driven expansion will further pressure established brands’ profitability.
Global light-vehicle demand is forecast to total 87.93 million units this year, a modest 0.2% increase. Regional projections include China at 24.47 million units (+0.5%), the United States at 15.93 million units (–2.3%), Western Europe at 15.14 million units (+1.5%), India at 4.82 million units (+5.6%), ASEAN at 3.19 million units (+3.8%), and South Korea at 1.64 million units (–0.6%). U.S. sales are expected to dip below 15 million units for the first time in three years due to higher vehicle prices and insurance costs, while Chinese demand remains flat amid softer consumer sentiment and reduced incentives for new energy vehicles. Domestic demand is also seen declining slightly as high household debt and inflation weigh on buyers.
Competition in smart-car software is intensifying, with advanced features once exclusive to premium electric vehicles now appearing in internal combustion and hybrid models. Yang emphasized that software responsiveness is becoming a key determinant of vehicle value.
The robotaxi sector is likewise gaining traction. Waymo and Tesla are broadening their U.S. service areas, Zoox continues aggressive investment, and Hyundai Motor Group aims to launch a robotaxi service in the United States by year-end.
Source: Business Korea
