Hyundai Motor Group has outpaced Volkswagen Group in the third-quarter profit, edging closer to claiming the world’s second-largest carmaker title this year for the first time.

From June to September, Hyundai Motor Company, Kia and Genesis posted 69.4 trillion won ($49.7 billion) in sales revenue and 6.5 trillion won in operating profit. Volkswagen Group reported higher sales of 78.5 billion euros ($84.2 billion), but it fell behind in profit with 2.9 billion euros.

This marks a significant milestone for the Korean carmaker, which exceeded the German rival in profit for the first time in the January–March period before Volkswagen regained the lead in the second quarter.

In terms of operating profit margin, Hyundai Motor reached 9.3 percent, widening the gap with Volkswagen’s 3.6 percent in the third quarter. In the April-June period, Hyundai and Volkswagen reported 10.9 percent and 6.6 percent in profit margin, respectively.

Regarding unit sales during the January–September period, Hyundai came in third with 5.5 million units, following Toyota with 7.2 million units and Volkswagen 6.5 million units. Toyota remains the world’s leading automaker, reporting third-quarter sales revenue of 11.4 trillion yen ($74.1 billion) and an operating profit of 1.2 trillion yen with a 10.1 percent profit margin.

With Volkswagen’s shrinking presence, industry watchers here expect Hyundai Motor is likely to become the second-largest carmaker in terms of profit by year-end, a first-ever in its history.

Volkswagen is reportedly reeling from operational inefficiencies and fierce competition in the electric vehicle market. It plans to shut down at least three car manufacturing plants in Germany, lay off tens of thousands of workers and cut wages by 10 percent.

Despite its deep commitment to China, a once-lucrative market for foreign car brands, deliveries in China fell 15 percent on-year in the third quarter. This was largely due to Chinese consumers’ opting for more affordable EVs made by homegrown brands including BYD.

Hyundai Motor has also suffered sluggish sales in China, but its diversification strategy has helped it maintain profitability even with the global slowdown in car sales overall.

“Unlike Volkswagen, which has capitalized on the booming Chinese market, Hyundai Motor avoided aggressive expansion there due to the country’s protectionist measures,” said Lee Hang-koo, head of the Jeonbuk Institute of Automotive Convergence Technology. “Instead, it ventured into emerging countries, such as India, often referred to as the ‘next China.’”

Hyundai Motor recently made a landmark debut on the Indian stock market, setting a record as the largest initial public offering in the nation’s history. With the capital raised, the carmaker vowed to boost investments in its auto manufacturing plants in India, clean mobility and research and development.

According to the Federation of Automobile Dealers Associations based in India, the Korean auto company sold over 270,000 units capturing a 13.8 percent market share in the first half of this year, ranking as the second best-selling brand after Japan’s Maruti Suzuki.