[THE INVESTOR] Hyundai Wia, the automotive parts unit of Hyundai Motor Group, is struggling to improve profits, hit hard by a slump in the all-important Chinese market. 

In its recent earnings report on July 27, the company reported its second-quarter operating profit of 90.79 billion won (US$81.86 million), a 31.6 percent plunge from a year earlier. 

Sales fell 2.7 percent to 1.94 trillion won, while net profit dropped 51 percent to 58.47 billion won from the same period last year.

According to company official, China’s tax benefit for small cars has affected the sales of Hyundai Wia, which has mainly supplied parts and engines for large cars.

“As we started producing hybrid engines, we expect to see an improvement in the second half on the year on the rising demand for eco-friendly cars,” said Lee Myung-ho, executive director at Hyundai Wia during a conference call on July 27.

“In the second half, we will improve the operation level of the factories, including the new plant in Mexico.”

Since last October, the Chinese government has halved sales tax on small cars with less than 1.6-liter engines to boost the country’s automobile market. The new regulation took a toll on Hyundai Wia, which largely manufactures 2.0-liter engines.

By Ahn Sung-mi (sahn@heraldcorp.com)