South Korea's top carmaker Hyundai has posted a 48% drop in second-quarter net profit as China retaliated against South Korean exporters over a new US missile defence system.

Hyundai reported net profit of 913.6 billion won (€701m in  April-June, down from 1.764 trillion won a year earlier.

"Hammered by fallouts from THAAD, net profit has decreased," the company said in a statement, referring to the US system known as Terminal High Altitude Area Defence (THAAD).

Seoul and Washington say the newly-installed system is intended to guard against missile threats from the nuclear-armed North.

But China strongly objects to the deployment, fearing THAAD's radar will spy on its own ballistic capabilities and upset the regional security balance.

Sales in China plunged a whopping 64% year-on-year to 105,000 vehicles in the second quarter.

Worldwide, Hyundai sold 1.1m cars including 182,000 in South Korea in the three months to June, down 13.8% year-on-year.

The company recorded strong sales in emerging markets like Russia and Brazil but falls in China resulted in a drop in overall overseas sales.

Hyundai said it would add new sports utility vehicles to its line-up and start rolling out the next-generation Genesis sedans later this year in the face of mounting competition and slow global growth.

Hyundai along with its affiliate Kia Motors is the world's fifth largest carmaker.