Korean automakers’ recovery hinges on retail sales; the robotics trade hinges on mass production
JPMorgan believes operating pressure on Hyundai Motor and Kia is nearing its lowest point, with a return to normal production and rising volumes of new models expected to support sequential improvement. Investors remain divided over the timing of a fourth-quarter recovery and whether the ramp-up of robotics production capacity can meet expectations.
Original source：J.P. MorganFirst published on Unhidea：Original source date：
Key takeaway
JPMorgan is more optimistic about the recovery and business expansion opportunities of automakers, but a fourth-quarter rebound depends on retail performance, while the robotics investment case is constrained by the timing of commercialization and factory ramp-ups.
Why does JPMorgan believe automakers’ pressure is nearing its lowest point?
JPMorgan believes the risk-reward profile for Hyundai Motor and Kia has turned favorable: pressure from a stronger Korean won over the past several quarters, a weak new-model cycle, input costs and competition in Europe is nearing its peak. Hyundai Motor has also faced production disruptions caused by strikes.
The recovery thesis rests on production returning to normal and new models gradually gaining volume, increasing the likelihood of sequential operating improvement in subsequent periods. Many investors on the Asian roadshow also accept that Hyundai Motor’s sales will rebound from the disrupted period, but still want to see supporting retail data before concluding that a meaningful recovery is possible in the fourth quarter of 2026. The main differences concern the timing and magnitude of the recovery.
Can cost pressures and European competition ease together?
Cost trends are mixed. Some investors are more reassured by falling prices for inputs such as aluminum, while others remain concerned about continued price increases for components such as DRAM. As a result, alongside the production recovery, cost improvements may not occur at the same pace.
In Europe, a greater number of investors interviewed believe reports of import quota restrictions on Chinese hybrid and plug-in hybrid models would help Hyundai Motor and Kia reduce pressure to offer sales incentives. However, Chinese automakers’ plans for local European capacity, and the possibility of shifting production to ASEAN and other locations for re-export, will affect the extent of any easing in competition.
Why are automakers favored over parts suppliers?
JPMorgan maintains its Overweight ratings on Hyundai Motor and Kia, ranking them ahead of Hyundai Mobis, also rated Overweight, and HL Mando, rated Neutral. Its reasons include the continuing improvement in the share of hybrid models, the potential value of robotics businesses, progress in autonomous driving and shareholder returns.
The bank also values automakers’ stronger bargaining power as system integrators in both automotive and robotics businesses. Mobis’s robotics opportunity is more dependent on renewed attention to the group’s related businesses; some investors were previously unaware of its involvement in developing hand modules, which could change their view of the company’s potential to expand its business.
Does the robotics sector lack catalysts or evidence of mass production?
Both near-term sentiment and expectations for longer-term volume growth face hurdles. JPMorgan forecasts global humanoid robot shipments of 1.75 million units in 2030, but many investors regard the forecast as optimistic and expect the growth inflection point to come later. The response to Tesla’s latest update was also muted and fell short of more optimistic expectations.
Potential sentiment catalysts include upcoming IPO events and CES in January of the following year, when major technology companies may unveil more humanoid robotics roadmaps. For individual suppliers, execution on capacity is more immediate: the ramp-up of Robotis’s Uzbekistan factory is a key factor in many investors’ decisions about when to enter.
JPMorgan maintains an Overweight rating on Robotis, citing its established actuator business serving more than 1,000 customers, its higher operating margin reflecting pricing power, and its strong sales growth prospects. Investors recognize the foundation of its existing business while tending to wait and observe the actual ramp-up of the new factory.
