Legacy automakers are increasingly caught between defending near-term profitability and sustaining long-term investment in future mobility, an analyst at Hyundai Motor Group said on Jan. 16, highlighting mounting pressure from tariffs, slowing demand and intensifying competition from Chinese brands.
Yang Jin-su, director of mobility industry research at Hyundai Motor Group’s Management Research Institute, said global auto markets are entering a period of entrenched low growth just as development costs for next-generation technologies continue to rise. Speaking at a seminar hosted by the Korea Automotive Journalists Association in Seoul, Yang said the combination could force companies into difficult management trade-offs.
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“Companies may face management dilemmas as profitability pressure for short-term survival collides with the need for continued future investment,” Yang said.
Automakers’ earnings have already come under strain. Yang cited estimates from Toyota, which expects tariff-related impacts between March last year and this March to reduce operating profit by about 1.4 trillion yen, up from an earlier estimate of 1.2 trillion yen. Volkswagen has also lowered its operating margin outlook, forecasting 4–5% for last year, around 1.5 percentage points below prior expectations.
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Chinese manufacturers are adding to the pressure. Yang said brands such as BYD are expanding both sales volume and market share across regions including Western Europe, Southeast Asia and Brazil. He noted that Chinese automakers are now shifting from export-led growth toward local production, citing BYD’s plans to begin manufacturing in Turkey this year. “As Chinese brands promote price competitiveness, existing automakers inevitably face pressure on profitability,” Yang said.
Global demand growth is expected to remain muted. Yang projected worldwide vehicle demand of 87.93 million units this year, up just 0.2% from last year. He forecast declines in the United States to 15.93 million units, the first drop to that level in three years, while China’s market is expected to remain largely flat amid weaker consumer sentiment and reduced incentives for new energy vehicles.
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At the same time, competition in future technologies is accelerating. Yang said advanced smart-car and software features are spreading beyond premium electric vehicles into internal combustion and hybrid models, making software responsiveness a critical determinant of vehicle value and market survival.
He also pointed to growing activity in robotaxi services. Waymo and Tesla are expanding autonomous ride-hailing services in the United States, while Zoox, backed by Amazon, continues to invest aggressively. Hyundai Motor Group, Yang added, plans to commercialize robotaxi services in the United States by the end of this year.
Source: Business Korea