Hyundai Motor Company and Kia have received the highest credit rating, ‘Triple A’ (AAA), from all three major credit rating agencies in South Korea. This improvement is attributed to increased product competitiveness and brand power, significantly enhancing profitability and financial stability. With higher credit ratings, they can secure funds at lower interest rates in financial markets. Hyundai and Kia aim to further boost their overseas credit ratings, currently at an ‘A’, in the near future.
According to the auto industry, the Korea Investors Service upgraded Hyundai’s credit rating to AAA on the 1st of this month, the first upgrade in five years since November 2019 (AA+). The AAA rating is the highest among the 20 credit ratings by the Korea Investors Service, essentially indicating no risk of bankruptcy.
A representative from the Korea Investors Service explained, “Hyundai is expected to maintain high profitability above the market average, benefiting from improved core profitability and favorable exchange rates.” Hyundai also received AAA ratings from other major agencies, NICE Investors Service and Korea Ratings, in April and September, respectively.
On the 1st, both the Korea Investors Service and NICE Investors Service upgraded Kia’s rating to AAA. Coupled with the AAA rating from Korea Ratings in September, Kia achieved a ‘Triple Crown.’ The agencies attributed the upgrade to Kia’s solidified position in the global market, enhanced product competitiveness, and brand recognition, suggesting that the company possesses the technical capability to respond to various market demands, including hybrid cars, electric vehicles, and internal combustion vehicles.
Hyundai and Kia are also receiving positive evaluations overseas. This year, Moody’s (February), Fitch (February), and Standard & Poor’s (S&P; September) all upgraded the companies’ ratings to ‘A.’ Among global automakers, only Hyundai, Kia, Toyota, and Honda have received an ‘A’ rating from these three agencies. Germany’s Volkswagen received a ‘BBB+’ from S&P, while America’s ‘Big Three’ automakers General Motors (GM), Ford, and Stellantis were rated ‘B’ by the three agencies.
Hyundai and Kia plan to accelerate their future business endeavors, such as electrification and software-defined vehicles (SDV), by leveraging their improved credit ratings. An increased credit rating not only improves corporate bond sales but also reduces issuance rates. Hyundai plans to invest 120.5 trillion KRW in future businesses over the next 10 years, an increase of about 10% from the 109.4 trillion KRW announced last year for investments from 2023 to 2032. Kia also announced a total investment of 38 trillion KRW by 2028, expanding its investment plan for 2023 to 2027 by 5 trillion KRW. A spokesperson for Hyundai and Kia stated, “We will enhance financial stability and profitability to establish a stable management environment.”